a.
Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.Dividend is the part of profit of the company which company distributes it to its shareholders such as equity shareholders and preference shareholders. It is the expense of company and is eliminated from the retained earnings of the company.
The percent of dividends paid by S company to be shown in consolidated financial statements.
b.
Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.Dividend is the part of profit of the company which company distributes it to its shareholders such as equity shareholders and preference shareholders. It is the expense of company and is eliminated from the retained earnings of the company.
The percent of dividends paid by P company to be shown in consolidated retained earnings.
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Chapter 9 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
- Determine the following asset balances that would appear in the consolidated financial statements of Portland and its 80% owned subsidiary:1) Current Assets2) Land3) Building and Equipment4) Goodwill5) Investment in Sidney Corporation6) Ordinary shares7) Retained earnings8) Minority interest9) Goodwill and minority interest assuming that Sydney’s shares are traded in the stock marketat P 20/share.arrow_forwardDetermine which of following entities SHALL and SHALL NOT prepare consolidated financial statements in accordance with PFRS 10. Explain your answer. I. Entity LOL Ltd. that has an immaterial participation of 90% in equity interest of YIE Ltd. II. Entity V, an investment entity, acquired an investment in a subsidiary(entity Y). Entity Y provides services that is related to Entity V’s investmentactivities. III. Entity C Ltd. that has an interest of 20% in equity shares of ACV Ltd. IV. Entity B ABC Group presents consolidated financial statementswhich includes Entity B. Entity B is itself a parent because it has controlling interests in 8 other entities. Entity B does not have equity traded in a regulated market but is waiting for the approval of listing its debt in the Philippine Stock Exchange.arrow_forward2. ABC Corporation holds ordinary shares of XYZ Inc. acquired as follows: Date of Acquisition Shares Total Cost September 19, Year 2 750 60,000 July 16, Year 1 1,250 110,000 The shares above were classified as equity investments at fair value through other comprehensive income. Fair values on December 31, Year 1 and Year 2 were P 85 and P 90 respectively. In Year 3, ABC Corp. Received 2,000 rights to purchase XYZ Inc. ordinary shares at P 80 per share. Five rights are required to purchase one share. ABC Corp. used rights to purchase additional 300 shares of XYZ Inc when each shares sells at P 100. Subsequently ABC sold the remaining rights at 4.50 each. At December 31, Year 3. XYZ Inc ordinary shares sell at P 98. Required:a) Determine the amount of the equity account Unrealized Gains or Losses on Equity Investments at Fair Value through Other Comprehensive Income at the end of the Years 1 and 2.b) Determine the amount taken to other comprehensive income as a result of the…arrow_forward
- Requirements: 7. What amount of non-controlling interest is to be presented in the consolidated statement offinancial position on December 31, 2x19?8. How much is the consolidated retained earnings attributable to Parent’s shareholder equity onDecember 31, 2x19?9. How much is the total consolidated assets on December 31, 2x19?arrow_forwardIntra group Transactions Kent Ltd owns all the share capital of Lodh Ltd. That is, Lodh Ltd is a wholly own subsidiary of Kent Ltd. Required: In relation to the following intra-group transactions, prepare the consolidation worksheet adjusting entries for the preparation of consolidated financial statements as at 30 June 2021. All parts are independent unless specified. Assume an income tax rate of 30% and that all income on sale of assets is taxable and expenses are deductible. A) During March 2021, Lodh Ltd paid a $5,500 interim dividend.arrow_forwardIntra group Transactions Kent Ltd owns all the share capital of Lodh Ltd. That is, Lodh Ltd is a wholly own subsidiary of Kent Ltd. Required: In relation to the following intra-group transactions, prepare the consolidation worksheet adjusting entries for the preparation of consolidated financial statements as at 30 June 2021. All parts are independent unless specified. Assume an income tax rate of 30% and that all income on sale of assets is taxable and expenses are deductible. a. On 1 January 2021, Kent Ltd sold inventory costing $10,000 to Lodh Ltd at a transfer (sale) price $16,000. Lodh Ltd sold half of this inventory to an external party for $10,000 (i.e., half of the inventory is remained with Lodh Ltd at the end of the year).arrow_forward
- Intra group Transactions Kent Ltd owns all the share capital of Lodh Ltd. That is, Lodh Ltd is a wholly own subsidiary of Kent Ltd. Required: In relation to the following intra-group transactions, prepare the consolidation worksheet adjusting entries for the preparation of consolidated financial statements as at 30 June 2021. All parts are independent unless specified. Assume an income tax rate of 30% and that all income on sale of assets is taxable and expenses are deductible. a. On 1 January 2021, Kent Ltd sold inventory costing $10,000 to Lodh Ltd at a transfer (sale) price $16,000. Lodh Ltd sold half of this inventory to an external party for $10,000 (i.e., half of the inventory is remained with Lodh Ltd at the end of the year). b. During March 2021, Lodh Ltd paid a $5,500 interim dividend. c. Kent Ltd rented a spare warehouse to Lodh Ltd. The total charge for the rental was $6,000. Lodh Ltd paid the whole amount to Kent Ltd during the year. d. On 1 July 2020, Kent…arrow_forwardIntra group Transactions Kent Ltd owns all the share capital of Lodh Ltd. That is, Lodh Ltd is a wholly own subsidiary of Kent Ltd. Required: In relation to the following intra-group transactions, prepare the consolidation worksheet adjusting entries for the preparation of consolidated financial statements as at 30 June 2021. All parts are independent unless specified. Assume an income tax rate of 30% and that all income on sale of assets is taxable and expenses are deductible. a. On 1 July 2020, Kent Ltd sold an item of plant costing $25 000 to Lodh Ltd for $28 000. PIA Ltd had not charged any depreciation on the plant before the sale. Both entities depreciate assets at 10% p.a. on cost.arrow_forwardIntra group Transactions Kent Ltd owns all the share capital of Lodh Ltd. That is, Lodh Ltd is a wholly own subsidiary of Kent Ltd. Required: In relation to the following intra-group transactions, prepare the consolidation worksheet adjusting entries for the preparation of consolidated financial statements as at 30 June 2021. All parts are independent unless specified. Assume an income tax rate of 30% and that all income on sale of assets is taxable and expenses are deductible. a. Kent Ltd rented a spare warehouse to Lodh Ltd. The total charge for the rental was $6,000. Lodh Ltd paid the whole amount to Kent Ltd during the year.arrow_forward
- Assume that Company A acquires 70 per cent of Company B for a cash price of $14 million when the share capital and reserves of Company B are: Share capital $8 million Retained earnings $2 million $10 million. A)Pass the necessary consolidation journal entries and the journal entries to record the non-controlling interest if the non-controlling interest in the acquirer is measured at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. b) What are some of the implications of allowing the group to have two options in accounting for goodwill on consolidation?arrow_forwardAssume that Company A acquires 70 per cent of Company B for a cash price of $14 million when the share capital and reserves of Company B are: Share capital $8 million Retained earnings $2 million $10 million A) What amount of goodwill will be shown in the consolidated statement of financial position pursuant to AASB 3 assuming that any non-controlling interest in the acquirer is measured at fair value? B) What amount of goodwill will be shown in the consolidated statement of financial position pursuant to AASB 3 assuming that any non-controlling interest in the acquirer is measured at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets? c) Pass the necessary consolidation journal entries and the journal entries to record the non-controlling interest if the non-controlling interest in the acquirer is measured at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.…arrow_forwardAn entity acquired a 30% interest in another entity in Year I. In Year 2, it acquired another 50% equity interest in the same entity. Which of the following statements is valid?I. The entity's per-existing 30% equity interest should be remeasured at fair value at the acquisition date.Il. The entity's net assets should be remeasured at fair value at acquisition date. a. II only b. Neither I nor II c. Both I and II d. I onlyarrow_forward