The following transactions occurred for the year ended December 31, 2020 regarding Entity C and its two subsidiaries, Entity P and Entity A: On January 1, 2020 Entity C acquired 90% of the outstanding common stocks of Entity P at a gain on bargain purchase of P100,000. On April 1, 2020, Entity C acquired 80% of the outstanding common stocks of Entity A at goodwill of P50,000. On July 1, 2020 A borrowed P1,000,000 from Entity P with annual interest of 10% per annum. On August 1, 2020, Entity C leased a building to Entity B at annual rental of P360,000. On September 1, 2020, Entity A rendered advertising services to Entity C in the amount of P200,000. On October 1, 2020, Entity C rendered management services to Entity A in the amount of P400,000. It is the policy of Entity C to account its Investment in Subsidiary using cost method in its separate financial statements. The following relevant data are provided from the separate financial statements of Entity C, Entity P, Entity A for the year ended December 31, 2020: Entity C Entity P Entity A 2020 Net Income P5,000,000 P3,000,000 P2,000,000 2020 Dividends Declared 1,000,000 500,000 400,000 What is the noncontrolling interest in net income to be reported in the consolidated income statement of Entity for the year ended December 31, 2020? A. P521,500 B. P720,500 C. P583,500 D. P647,500

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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The following transactions occurred for the year ended December 31, 2020 regarding Entity C and its two subsidiaries, Entity P and Entity A:

On January 1, 2020 Entity C acquired 90% of the outstanding common stocks of Entity P at a gain on bargain purchase of P100,000.
On April 1, 2020, Entity C acquired 80% of the outstanding common stocks of Entity A at goodwill of P50,000.
On July 1, 2020 A borrowed P1,000,000 from Entity P with annual interest of 10% per annum.
On August 1, 2020, Entity C leased a building to Entity B at annual rental of P360,000.
On September 1, 2020, Entity A rendered advertising services to Entity C in the amount of P200,000.
On October 1, 2020, Entity C rendered management services to Entity A in the amount of P400,000.
It is the policy of Entity C to account its Investment in Subsidiary using cost method in its separate financial statements.
The following relevant data are provided from the separate financial statements of Entity C, Entity P, Entity A for the year ended December 31, 2020:

Entity C Entity P Entity A

2020 Net Income P5,000,000 P3,000,000 P2,000,000

2020 Dividends Declared 1,000,000 500,000 400,000

What is the noncontrolling interest in net income to be reported in the consolidated income statement of Entity for the year ended December 31, 2020?

A. P521,500

B. P720,500

C. P583,500

D. P647,500

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