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: Subsidiary Parent Value Parent Company Company Cash 700,000 100,000 100,000 300,000 1,000,000 500,000 1,000,000 Inventory 50,000 55,000 PPE 350,000 365,000 Liabilities Outstanding Shares Retained earnings 200,000 200,000 200,000 100,000 500,000 Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 folow: INCOME AND RETAINED EARNINGS Parent Subsidiary Company Company 550,000 Sales 800,000 Dividend income Cost of sales 40,000 (480,000) (250,000) (60,000) 300,000 500,000 (100,000) 700,000 Operating expenses Net income (150,000) 150,000 Retained earnings, Jan 1, 2019 Dividends declared 100,000 (50,000) Retained earnings end 200,000 BALANCE SHEET Cash 300,000 100,000 650,000 350,000 900,000 2,300,000 125,000 Receivables 30,000 Inventory Investment in Subsidiary 45,000 PPE 350,000 Total 550,000 Liabilities 600,000 150,000 Outstanding shares Retained earnings 1,000,000 200,000 200,000 700,000 2,300,000 Total 550,000 Additional Information: 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. 1. 2.
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: Subsidiary Parent Value Parent Company Company Cash 700,000 100,000 100,000 300,000 1,000,000 500,000 1,000,000 Inventory 50,000 55,000 PPE 350,000 365,000 Liabilities Outstanding Shares Retained earnings 200,000 200,000 200,000 100,000 500,000 Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 folow: INCOME AND RETAINED EARNINGS Parent Subsidiary Company Company 550,000 Sales 800,000 Dividend income Cost of sales 40,000 (480,000) (250,000) (60,000) 300,000 500,000 (100,000) 700,000 Operating expenses Net income (150,000) 150,000 Retained earnings, Jan 1, 2019 Dividends declared 100,000 (50,000) Retained earnings end 200,000 BALANCE SHEET Cash 300,000 100,000 650,000 350,000 900,000 2,300,000 125,000 Receivables 30,000 Inventory Investment in Subsidiary 45,000 PPE 350,000 Total 550,000 Liabilities 600,000 150,000 Outstanding shares Retained earnings 1,000,000 200,000 200,000 700,000 2,300,000 Total 550,000 Additional Information: 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. 1. 2.
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 38P
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Requirements:
7. What amount of non-controlling interest is to be presented in the consolidated
financial position
8. How much is the consolidated retained earnings attributable to Parent’s shareholder equity on
December 31, 2x19?
9. How much is the total consolidated assets on December 31, 2x19?
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