On January 2, 2020, P Company acquired 80% interest in S Company for P4,125,000 cash. On this date, the outstanding ordinary share capital and accumulated profits of P Company and S Company are as follows: P Company S Company Ordinary share capital P2,250,000 P1,312,000 Share premium 1,500,000 Accumulated profits (losses) 5,250,000 3,187,500 There was no issuance of ordinary shares during the year. Noncontrolling interest is initially measured at fair value. Fair value of the following assets of S Company exceeded their book values as follows: Inventories, P210,000; Property and equipment (remaining useful life 10 years), P127,500. All other assets and liabilities are fairly valued. Goodwill if any is not impaired. On December 31, 2020, the two companies reported the following operating results: P Company P1,785,000 S Company Net income P975,000 Dividends paid 525,000 262,500 1. Compute for the consolidated shareholders' equity.
On January 2, 2020, P Company acquired 80% interest in S Company for P4,125,000 cash. On this date, the outstanding ordinary share capital and accumulated profits of P Company and S Company are as follows: P Company S Company Ordinary share capital P2,250,000 P1,312,000 Share premium 1,500,000 Accumulated profits (losses) 5,250,000 3,187,500 There was no issuance of ordinary shares during the year. Noncontrolling interest is initially measured at fair value. Fair value of the following assets of S Company exceeded their book values as follows: Inventories, P210,000; Property and equipment (remaining useful life 10 years), P127,500. All other assets and liabilities are fairly valued. Goodwill if any is not impaired. On December 31, 2020, the two companies reported the following operating results: P Company P1,785,000 S Company Net income P975,000 Dividends paid 525,000 262,500 1. Compute for the consolidated shareholders' equity.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
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Transcribed Image Text:PROBLEM V.
On January 2, 2020, P Company acquired 80% interest in S Company for P4,125,000 cash. On this date, the outstanding
ordinary share capital and accumulated profits of P Company and S Company are as follows:
P Company
S Company
Ordinary share capital
P2,250,000
P1,312,000
1,500,000
5,250,000
Share premium
Accumulated profits (losses)
3,187,500
There was no issuance of ordinary shares during the year. Noncontrolling interest is initially measured at fair value. Fair
value of the following assets of S Company exceeded their book values as follows: Inventories, P210,000; Property and
equipment (remaining useful life 10 years), P127,500. All other assets and liabilities are fairly valued. Goodwill if any is not
impaired. On December 31, 2020, the two companies reported the following operating results:
P Company
S Company
Net income
P1,785,000
P975,000
Dividends paid
525,000
262,500
1. Compute for the consolidated shareholders' equity.
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