On January 4, 2021, P Company purchased 75% interest in S Corporation for P300,000. S's recorded assets and liabilities as of acquisition are P400,000 and P120,000, respectively. Net asset of S is fairly valued except for inventory which is over-valued by P20,000 and machinery (5-year useful life) which is under-valued by P40,000. NCI is measured at fair value. For the year 2021, P reported net income of P150,000 and paid dividend of P80,000 while S reported net income of P40,000 and paid dividend of P20,000. The parent elects the "equity method" in accounting for its investment in subsidiary. The working paper elimination entry for 2021 will include: A. Credit share in profit of the subsidiary, P30,000 B. Debit to dividend income, P15,000 C. Credit depreciation expense, P8,000 D. Debit goodwill, P100,000 E. All of the above
On January 4, 2021, P Company purchased 75% interest in S Corporation for P300,000. S's recorded assets and liabilities as of acquisition are P400,000 and P120,000, respectively. Net asset of S is fairly valued except for inventory which is over-valued by P20,000 and machinery (5-year useful life) which is under-valued by P40,000. NCI is measured at fair value. For the year 2021, P reported net income of P150,000 and paid dividend of P80,000 while S reported net income of P40,000 and paid dividend of P20,000. The parent elects the "equity method" in accounting for its investment in subsidiary.
The working paper elimination entry for 2021 will include:
A. Credit share in profit of the subsidiary, P30,000
B. Debit to dividend income, P15,000
C. Credit
D. Debit
E. All of the above
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