Prepare the worksheet for consolidation purposes (Debit, Credit, Consolidated Amount) On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company for P350,000. Thefinancial statements of Parent and Subsidiary Company before the acquisition follow:ParentSubsidiary ParentCompany Company Value700,000300,0001,000,000500,0001,000,000500,000CashInventoryPPE100,000 100,00050,00055,000350,000 365,000200,000 200,000200,000100,000LiabilitiesOutstanding SharesRetained eamings|Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow:AdditionalInfomation:The undervalued PPE of Subsidiary on the date of acquisition has a remaining useful life of 5-years.Subsidiary Company owes Parent Company P5,000 on December 31, 2x19. CONSOLIDATED BALANCE SHEETJANUARY 1, 20X9BALANCE SHEETCashReceivables300,000100,000650,000350,000900,000125,00030,00045,000InventoryInvestment in SubsidiaryPPE350,000Total2,300,000550,000LiabilitiesOutstanding sharesRetained earnings600,0001,000,000700,000150,000200,000200,000Total2,300,000550,000CONSOLIDATED WORKSHEETDECEMBER 31, 20X9INCOMEANDRETAINEDParentSubsidiaryCompany550,000EARNINGSDebitsCreditsCompany800,00040,000(480,000)SalesDividend incomeCost of sales(250,000)(150,000)150,000Operating expenses(60,000)300,000Net incomeRetained earnings, Jan 1, 20x19500,000(100,000)700,000100,000(50,000)200,000Dividends declaredRetained earnings endBALANCE SHEETCash300,000100,000650,000350,000900,000125,00030,00045,000ReceivablesInventoryInvestment in SubsidiaryPPE350,000Total2,300,000550,000600,0001,000,000700,000Liabilities150,000200,000Outstanding sharesRetained earnings200,000Total2,300,000550,000

On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company for P350,000. The financial statements of Parent and Subsidiary Company before the acquisition follow: Parent Subsidiary Parent Company Company Value 700,000 300,000 100,000 100,000 50,000 350,000 365,000 200,000 200,000 200,000 Cash Inventory PPE Liabilities Outstanding Shares Retained eamings 55,000 1,000,000 500,000 1,000,000 500,000 100,000 Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow: AdditionalInfomation: The undervahued PPE of Subsidiary on the date of acquisition has a remaining useful life of 5-years. Subsidiary Company owes Parent Company PS,000 on December 31, 2x19.

On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company for P350,000. The financial statements of Parent and Subsidiary Company before the acquisition follow: Parent Subsidiary Parent Company Company Value 700,000 300,000 100,000 100,000 50,000 350,000 365,000 200,000 200,000 200,000 Cash Inventory PPE Liabilities Outstanding Shares Retained eamings 55,000 1,000,000 500,000 1,000,000 500,000 100,000 Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow: AdditionalInfomation: The undervahued PPE of Subsidiary on the date of acquisition has a remaining useful life of 5-years. Subsidiary Company owes Parent Company PS,000 on December 31, 2x19.

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

Section: Chapter Questions

Problem 38P

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On January 1, 20x8, Parent Company purchased 80% of the outstanding shares of Subsidiary Company for P800,000. On the date of acquisition, Subsidiary Company reported Ordinary Shares of P800,000 and Retained Earnings of P200,000. Subsidiary’s Inventory was understated by P20,000; Equipment with a 5-year life was understated by P20,000, Building with an 8-year life was understated by P80,000 and land was understated by P40,000. The non-controlling interest is to be stated at fair value and the fair value of the non-controlling interest on January 1, 20x8 is P210,000. During the year, Parent sold goods to Subsidiary for P150,000 at a 25% mark-up and in turn purchased P200,000 of Subsidiary’s goods which Subsidiary sold at a 20% mark-up. From the goods purchased, P50,000 remain in Parent’s books at the end of the year, while P20,000 remain in Subsidiary’s books at the end of the year. 30% of the undervalued inventory of Subsidiary still remain unsold by the end of 20x8. The following are…
On January 1, 20x8,Parent Company purchased 80% of the outstanding shares of Subsidiary Company for P800,000. On the date of acquisition, Subsidiary Company reported Ordinary Shares of P800,000 and Retained Earnings of P200,000. Subsidiary’s Inventory was understated by P20,000; Equipment with a 5-year life was understated by P20,000, Building with an 8-year life was understated by P80,000 and land was understated by P40,000. The non-controlling interest is to be stated at fair value and the fair value of the non-controlling interest on January 1, 20x8 is P210,000. The following are taken from the books of Parent and Subsidiary for 20x8: Determine the Non-Controlling Interest as of December 31, 20x8. Your answer
On January 1, 20x8,Parent Company purchased 80% of the outstanding shares of Subsidiary Company for P800,000. On the date of acquisition, Subsidiary Company reported Ordinary Shares of P800,000 and Retained Earnings of P200,000. Subsidiary’s Inventory was understated by P20,000; Equipment with a 5-year life was understated by P20,000, Building with an 8-year life was understated by P80,000 and land was understated by P40,000. The non-controlling interest is to be stated at fair value and the fair value of the non-controlling interest on January 1, 20x8 is P210,000. The following are taken from the books of Parent and Subsidiary for 20x8. 1. Determine the Non-Controlling Interest as of December 31, 20x8. 2.
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