AFAR.3105- Separate-and- Consolidated- Statements (Drill) PDF

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Question 1On January 1, 2020, P Company purchased 80% of S Company’s outstanding stock for P2,000,000, an amount equal to the book value of interest acquired. Appraisal of S Company’s net assets revealed that land is undervalued by P80,000 while Plant Assets with remaining life of 5 years is overval...

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Question 1

Question 4

On January 1, 2020, P Company purchased 80% of S Company’s outstanding stock for P2,000,000, an amount equal to the book value of interest acquired. Appraisal of S Company’s net assets revealed that land is undervalued by P80,000 while Plant Assets with remaining life of 5 years is overvalued by P200,000. Substantial portion of S Company’s inventories came from P Company. Summary of inter-company shipments are given below:

On January 1, 2020. P Corporation purchased 75% of the common stock of S Company. Separate balance sheet data for the companies at the combination date are given below: P Corporation S Company Cash P9,600 P82,400 Accounts receivable 57,600 10,400 Inventory 52,800 15,200 Land 31,200 12,800 Plant assets 280,000 120,000 Accumulated depreciation (96,000) (24,000) Investment in S co. 156,800 ________ Total assets P492,000 P216,800 Accounts payable P82,400 P56,800 Capital stock 320,000 120,000 Retained earnings 89,600 40,000 Total equities P492,000 P216,800 At the date of combination the book values of S Company’s net assets was equal to the fair value of the net assets except for S Company’s inventory which has a fair value of P24,000. Indicate in each of the questions what the consolidated balance would be for the requested account, assuming the amount assigned to NCI is the proportionate share in the fair value of net assets. What amount of inventory will be reported Correct answer: P76,800

Jan. 1

Merchandise costing P420,000 are shipped at 25% gross profit based on cost. May 1 Merchandise costing P660,000 are shipped at the same gross profit rate used on Jan.1 Nov. 1 Merchandise costing P209,600 are shipped at the same gross profit rate used on Jan.1 of which 1/5 is on hand at December 31, 2020. The amount of inter-company sales to be eliminated Correct answer: P1,612,000

Question 2 Stain Corporation is an 80%-owned subsidiary of Paint Corporation. During 2019 Stain sold merchandise that cost P96,000 to Paint for P128,000. Paint's ending inventory at December 31, 2019 contained unrealized profit of P6,400 from the intercompany sales. During 2020 Stain sold merchandise that cost P112,000 to Paint for P152,000. Onehalf of this remained unsold by Paint at December 31, 2020 For 2020 Paint's separate income was P200,000 and Stain's reported net income was P152,000. The consolidated net income for 2020 will be: Correct Answer: P338,400

Question 3 P Corporation acquired 70% of the voting common stock of S Company at a time when S Company’s book values and fair values were equal. Separate incomes of P Corporation and S Company for 2020 are as follows: P S Company Corporation Sales 633,600 350,400 Cost of Goods Sold 384,000 192,000 Operating expenses 115,200 96,000 Separate income from own operations 134,400 62,400 Intercompany sales from P to S for 2019 and 2020 are summarized as follows: Cost Selling Unsol Price d at yearend Intercompany sales – 240,00 374,400 30% 2019 0 Intercompany sales – 168,00 264,000 40% 2020 0 The 2020 consolidated income statement will show cost of goods sold of Correct answer: P310,080

Question 5 On January 1, 2020. P Corporation purchased 75% of the common stock of S Company. Separate balance sheet data for the companies at the combination date are given below: P Corporation S Company Cash P9,600 P82,400 Accounts receivable 57,600 10,400 Inventory 52,800 15,200 Land 31,200 12,800 Plant assets 280,000 120,000 Accumulated (96,000) (24,000) depreciation Investment in S co. 156,800 ________ Total assets P492,000 P216,800 Accounts payable P82,400 P56,800 Capital stock 320,000 120,000 Retained earnings 89,600 40,000 Total equities P492,000 P216,800 At the date of combination, the book values of S Company’s net assets were equal to the fair value of the net assets except for S Company’s inventory which has a fair value of P24,000. Indicate in each of the questions what the consolidated balance would be for the requested account, assuming the amount assigned to NCI is the proportionate share in the fair value of net assets.

What is the amount of the non-controlling interest? Correct answer: P42,200

Question 6 On January 1, 2018, Subsidiary Company purchased a delivery truck with an expected useful life of 5 years and scrap value of P6,400. On January 1, 2020, Subsidiary

Company sold the truck to Parent Company and recorded the following entry: Debit Credit Cash 40,000 Accumulated depreciation 14,400 Truck 42,400 Gain on sale of truck 12,000 Parent holds 60% of Subsidiary's voting shares. Subsidiary reported net income of P44,000, and Parent reported separate net income of P78,400 for 2020 In preparing the consolidated financial statements for 2020, depreciation expense will be: Correct answer: credited for P4,000 in the elimination entries.

Question 7 On January 1, 2018, Subsidiary Company purchased a delivery truck with an expected useful life of 5 years and scrap value of P6,400. On January 1, 2020, Subsidiary Company sold the truck to Parent Company and recorded the following entry: Debit Credit Cash 40,000 Accumulated depreciation 14,400 Truck 42,400 Gain on sale of truck 12,000 Parent holds 60% of Subsidiary's voting shares. Subsidiary reported net income of P44,000, and Parent reported separate net income of P78,400 for 2020. The consolidated net income for 2020 will be: Correct answer: P 94,240

Question 8 P Company acquired a 90% interest in S Company in 2018 at a time when S Company's book values and fair values were equal to one another. On January 1, 2020, S sold a machine with a P24,000 book value to P Company for P48,000. P depreciates the machine over 10 years using the straight line method. Separate incomes for P and S for 2020 are as follows: Sales Gain on sale of machinery

P Co. P960,000

Cost of goods sold (400,000) Depreciation expense (240, 000) Other expenses (96,000) Separate incomes P224,000 The consolidated net income for 2020 is: Correct answer: P322,400

S. Co. P560,000 24,000 (152,000) (72,000) (240,000) P120,000...