Pure Corporation acquired an 80% interest in Sincere Company on January 2, 20x6 for P2,520,000. On this date, the share capital and retained earnings of the two companies follow: Pure Co Sincere Co Share Capital Retained Earnings 6,000,000 2,250,000 3,000,000 450,000 On Januarv 2. 20x6. the assets and liabilities ot Sincere Co were stated at their tair values except tor machinery which is P225,000 lower than its tair value (remaining lite is 3 vears). On September 30, 20x6, Sincere sold merchandise to Pure at an inter-company protit ot P150,000; 25% was still unsold at year-end. Likewise, on October 1, 20x7, Sincere purchased merchandise from Pure for P3,600,000. The selling affiliate included a 20% mark-up on cost on this date. Only 75% of these purchases had been sold to unrelated parties as of December 31, 20x7. As of December 31, 20x7, goodwill was determined to be impaired by P60,000. The following is the summary of the 20x7 transactions of the affiliated companies: Pure Co Sincere Co Net Income 1,500,000 600,000 Dividends declared 600,000 180,000 Determine the following to be presented in the consolidated financial statements for 20x7 if the non- controlling interest is stated at fair value. Non controlling interest in net income?
Pure Corporation acquired an 80% interest in Sincere Company on January 2, 20x6 for P2,520,000. On this date, the share capital and retained earnings of the two companies follow: Pure Co Sincere Co Share Capital Retained Earnings 6,000,000 2,250,000 3,000,000 450,000 On Januarv 2. 20x6. the assets and liabilities ot Sincere Co were stated at their tair values except tor machinery which is P225,000 lower than its tair value (remaining lite is 3 vears). On September 30, 20x6, Sincere sold merchandise to Pure at an inter-company protit ot P150,000; 25% was still unsold at year-end. Likewise, on October 1, 20x7, Sincere purchased merchandise from Pure for P3,600,000. The selling affiliate included a 20% mark-up on cost on this date. Only 75% of these purchases had been sold to unrelated parties as of December 31, 20x7. As of December 31, 20x7, goodwill was determined to be impaired by P60,000. The following is the summary of the 20x7 transactions of the affiliated companies: Pure Co Sincere Co Net Income 1,500,000 600,000 Dividends declared 600,000 180,000 Determine the following to be presented in the consolidated financial statements for 20x7 if the non- controlling interest is stated at fair value. Non controlling interest in net income?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
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Transcribed Image Text:Pure Corporation acquired an 80% interest in Sincere Company on January 2, 20x6 for P2,520,000. On this
date, the share capital and retained earnings of the two companies follow:
Pure Co
Sincere Co
Share Capital
Retained Earnings
6,000,000
2,250,000
3,000,000
450,000
On Januarv 2. 20x6. the assets and liabilities of Sincere Co were stated at their tair values except tor machinery
which is P225,000 lower than its tair value (remaining lite is 3 vears). On September 30, 20x6, Sincere sold
merchandise to Pure at an inter-company protit ot P150,000; 25% was still unsold at year-end. Likewise, on
October 1, 20x7, Sincere purchased merchandise from Pure for P3,600,000. The selling affiliate included a
20% mark-up on cost on this date. Only 75% of these purchases had been sold to unrelated parties as of
December 31, 20x7. As of December 31, 20x7, goodwill was determined to be impaired by P60,000. The
following is the summary of the 20x7 transactions of the affiliated companies:
Pure Co
Sincere Co
Net Income
1,500,000
600,000
600,000
180,000
Dividends declared
Determine the following to be presented in the consolidated financial statements for 20x7 if the non-
controlling interest is stated at fair value. Non controlling interest in net income?
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