Title | Chapter-16 - Advanced Accounting- Subsequent to date of Acquisition |
---|---|
Author | Florgelyn Rojas |
Course | Intermediate Accounting |
Institution | Pamantasan ng Lungsod ng Valenzuela |
Pages | 25 |
File Size | 578.9 KB |
File Type | |
Total Downloads | 168 |
Total Views | 655 |
CHAPTER 16MULTIPLE CHOICES - COMPUTATIONAL16-1: c, [(P260,000/80%) x 20%]16-2: d, consolidated CI will decrease by P6,000 due to amortization of the allocated excess(P60,000 / 10 years).16-3: a, because there is no NCI in a wholly owned subsidiary.16-4: cInvestment cost (price paid) P500,Less: Book ...
CHAPTER 16 MULTIPLE CHOICES - COMPUTATIONAL 16-1:
c, [(P260,000/80%) x 20%]
16-2:
d, consolidated CI will decrease by P6,000 due to amortization of the allocated excess (P60,000 / 10 years).
16-3:
a, because there is no NCI in a wholly owned subsidiary.
16-4:
c Investment cost (price paid) Less: Book value of interest acquired Excess
Investment cost Parent’s share of subsidiary’s CI Dividends received from subsidiary Amortization of allocated excess (P60,000/20) Investment account balance, Dec. 31, 2013 16-5:
P500,000 480,000 P 60,000 Cost Method P500,000 P500,000
a NCI, January 2, 2013 [(P270,000/75%) x 25%] NCI in S Company dividends [(P60,000/75%) x 25%] NCI in S Company CI (P160,000 x 25%) NCI balance, December 31, 2013
16-6:
P 90,000 (16,000) 40,000 P114,000
a Puno’s CI Dividend income (P40,000 x 90%) Puno’s CI from own operations Salas’ CI from own operations Consolidated CI
16-7:
Equity Method P500,000 120,000 ( 48,000) ( 3,000) P569,000
P 145,000 ( 36,000) 109,000 120,000 P 229,000
b Peter’s CI from own operations Seller’s CI from own operations Consolidated CI Attributable to NCI (P200,000 x 20%) Attributable to parent
P1,000,000 200,000 1,200,000 40,000 P1,160,000
68
16-8:
a
Investment in Son, Jan. 1 Pop’s share of Son’s CI (100%) Dividends received (100%) Amortization of allocated excess to Equipment (P38,000 / 10) Investment in Son, Dec. 31 P648,600
16-9:
2011 P310,000 150,000 ( 60,000) (
2012 P396,200 180,000 (60,000)
2013 P512,400 200,000 ( 60,000)
3,800) ( 3,800) P396,200
( 3,800) P512,400
a Sy’s CI Amortization of allocated excess Adjusted CI of Sy
P300,000 ( 60,000) P240,000
NCI in CI of subsidiary (P240,000 x 10%)
P 24,000
16-10: a. Under the equity method consolidated retained earnings is equal to the retained earnings of the parent company. 16-11: c Retained earnings, Jan. 2, 2013 – Puzon Consolidated CI attributable to parent: CI – Puzon CI – Suarez Dividend income (P20,000 x 80%) NCI in Suarez CI (P40,000 x 20%)
P500,000 P200,000 40,000 (16,000) ( 8,000)
Dividends paid – Puzon Consolidated retained earnings, Dec. 31, 2013
216,000 ( 50,000) P666,000
16-12: c Price price Less book value of interest acquired: Excess Allocation due to undervaluation of net assets Goodwill
P1,700,000 1,260,000 P 440,000 ( 40,000) P 400,000
16-13: d NCI, January 2, 2013 [(P975,000/80%) x 20%] NCI in subsidiary dividends (P125,000 x20%) NCI in adjusted CI of subisidiary (P190,000 – P10,000) x 20% NCI, December 32, 2013
P243,750 (25,000) 36,000 P182,750
69
16-14: b Presto’s CI from own operations Stork’s CI – March to December (P80,000 – P23,000) NCI share in Stork’s CI (P57,000 x 10%) Consolidated CI attributable to parent
P140,000 57,000 ( 5,700) P191,300
16-15: b Investment in Siso Company (at date of acquisition)
P600,000
Dividend income (P30,000 x 5%)
P 1,500
16-16 d Consolidated CI: Pepe’s CI from own operations Sison’s adjusted CI: CI -2013 Amortization of allocated excess to equipment (P20,000 / 5) Consolidated CI
P210,000 P67,000 4,000
Consolidated retained earnings: Pepe’s retained earnings, Jan.2, 2012 Consolidated CI attributable to parent– 2012 Pepe’s CI from own operations P185,000 Sison’s adjusted CI; CI – 2012 P40,000 Amortization -2012 4,000 36,000 NCI in Sison’s CI (P36,000 x 30%) (10,800) Dividends paid ,2012 - Pepe Pepe’s retained earnings, Jan. 2, 2013 Consolidated CI attributable to parent– 2013: Consolidated CI (see above) P273,000 NCI in Sison’s CI (P63,000 x 30%) ( 18,900) Dividends paid, 2013 – Pepe Consolidated retained earnings, Dec. 31, 2013
63,000 P273,000
P701,000
210,200 ( 50,000) P861,200
254,100 ( 60,000) P1,055,300
16-17: a Price paid NCI, June 30, 2013 [(P700,000/70%) x 30%} Total Less book value of Susy’s net assets (P650,000 + P250,000) Excess, allocated to building Amortization (P100,000 / 10) x 2/12
P 700,000 300,000 1,000,000 900,000 P 100,000 5,000
70
16-17, continued:
Consolidated retained earnings Retained earnings, Jan. 1, 2013 – Pepe P550,000 Consolidated CI attributable to parent: CI – Precy P275,000 Adjusted CI of Susy: CI of Susy P100,000 Amortization (P100,000 / 10) ÷ 2 ( 5,000) 95,000 NCI in Susy’s CI (P95,000 x 30%) (28,500) 341,500 Dividends paid – Precy ( 70,000) Consolidated retained earnings, Dec. 31, 2013 P821,500 Non-controlling interest NCI, June 30, 2013 NCI in Susy’s dividends, July 1 to December 31 NCI in Susy’s CI (P100,000 – P5,000) x 30% NCI, December 31, 2013
P300,000 -028,500 P328,500
16-18: a Goodwill Price paid Less: Book value of interest acquired (P1,320,000 – P320,000) Goodwill (not impaired)
P1,200,000 1,000,000 P 200,000
Consolidated retained earnings under the equity method is equal to the retained earnings of the parent company, P1,240,000. 16-19: b CI – Pablo Dividend income (P40,000 x 70%) Sito’s CI NCI in Sito’s CI (P70,000 x 30%) Consolidated CI attributable to parent
P130,000 (28,000) 70,000 (21,000) P151,000
16-20: c Consolidated net income – 2013 CI – Ponce Dividend income (P15,000 x 60%) Solis’ CI NCIin Solis’ CI (P40,000 x 40%) Consolidated CI attributable to parent – 2013
P 90,000 (9,000) 40,000 (16,000) P105,000
71
16-20, continued:
Consolidated retained earnings – 2013 Retained earnings, Jan. 2, 2012- Ponce Consolidated CI attributable to parent– 2012 CI – Ponce Dividend income (P30,000 x 60%) Solis’ CI NCI in Solis’s CI (P35,000 x 40%) Dividends paid, 2012– Ponce Consolidated retained earnings, Dec. 31, 2012 Consolidated CI attributable to parent– 2013 Dividends paid. 2013 – Ponce Consolidated retained earnings, Dec. 31, 2013
P 400,000 P70,000 (18,000) 35,000 ( 14,000) 75,000 (25,000) P450,000 105,000 (30,000) P525,000
16.21 b Price paid, January 2, 2013 NCI, January 2, 2013 {(P216,000/80%) x 20%] Total Less book value of Seed’s net assets (P80,000 + P140,000) Excess Allocated to: Depreciable assets Goodwill Consolidated CI, December 31, 2013: Polo CI from own corporation Seed CI from own operation: CI Amortization (40,000 ÷ 10%) GW impairment lost Total
P216,000 54.000 270,000 220,000 50,000 (40,000) 10,000
P 95,000 35,000 (4,000) (8,000)
23,000 P118.000
16-22: c Retained earnings 1/1/013 – Polo Consolidated CI attributed to parent: Consolidated CI NCI in Seed’s adjusted CI (23,000x 20%) Total Dividends paid- Polo Consolidated retained earnings 12/31/013
P520,000 118,000 (4,600)
113,400 633,400 (46,000) P587,400
16-23: b, P4,600 (see 16-22)
72
16-24: c NCI, January 2, 2013 NCI ins Seed’s dividends (P15,000 x 20%) NCI in Seed’s CI NCI, December 31, 2013
P 54,000 (3,000) 4,600 P 55,600
16-25: c (see no. 16-22) 16-26: a Price paid, January 1, 2012 NCI, January 1, 2012 [(P231,000/70%) x 30%] Total Less book value of Sisa’s net assets Excess Allocated to depreciable assets (10 years remaining life)
P231,000 99,000 330,000 280,000 50,000 (50,000)
Retained earnings, 1/1/13-Sisa company Retained earnings, 1/1/12-Sisa company (squeeze) Increase Amortization- prior years (50,000 ÷ 10 years) Adjusted increase in earnings of Sisa (21,000/30% )
P230,000 155,000 75,000 (5,000) P70,000
16-27: a Retained earnings 1/1/13- Pepe Retained earnings 1/1/13- Sisa Adjustment and elimination: Date of acquisition Undistributed earnings to NCI Amortization- prior year Consolidated retained earnings 1/1/13
P520,000 230,000 (155,000) (21,000) (5,000)
16-28: a Pepe company CI, 2013 Sisa company CI, 2013 Dividend income (10,000 x 70%), 2013 Amortization- 2013 Consolidated CI 16-29: a Consolidated retained earnings 1/1/13(see 16 – 27) Consolidated CI attributable to parent: Consolidated CI (see 16-28) 133,000 NCI in Sisa CI (25,000 – 5,000) 30% (6,000) Dividend paid- Pepe company Consolidated retained earnings 12/31/13
49,000 P569,000
P120,000 25,000 (7,000) (5,000) P133,000
P569,000
127,000 ( 50,000) P646,000
73
16-30: a Cash Proceeds Fair value of retained NCI (40%) Carrying amount of NCI before deconsolidation Total Less carrying value of Simon Company net assets Gain on sale to profit or loss
P3,000,000 1,750,000 500,000 5,250,000 5,000,000 P 250,000
16-31: c The gain is computed as follows: Cash proceeds Carrying value of interest sold (P2,400,000 x 10%) Gain to APIC
P280,000 240,000 P 40,000
Since the APIC is only P30,000 on the date of sale, the remaining P10,000 is to be credited to retained earnings account.
74
PROBLEMS Problem 16-1 1.
Determination and Allocation of Excess Schedule:
Fair value of subsidiary Less book value of interest acquired Capital stock Retained earnings Total equity Interest acquired Book value Excess Allocation to: Fixed assets
2.
Implied Fair Value
Parent Price (80%)
NCI Value (20%)
P 312,500
P 250,000
P 62,500
P 250,000 80% P200,000 P 50,000
P 250,000 20% P 50,000 P 12,500
P 100,000 150,000 P 250,000
P 62,500 62,500
Working Paper Elimination Entries: a.
Eliminate dividends declared by the subsidiary against dividend income and NCI: Dividend income NCI Dividends declared – Sulu
b.
e.
100,000 150,000 200,000 50,000
Allocate excess to fixed assets: Fixed assets Investment in Sulu Company NCI
d.
5,000
Eliminate equity accounts of the subsidiary against the investment account and the NCI account. Common stock – Sulu Retained earnings – Sulu Investment in Sulu Company NCI
c
4,000 1,000
Amortized fixed assets (P62,500 / 10) Expenses Fixed assets
62,500 50,000 12,500
6,250 6,250
Recognize NCI in subsidiary net income: NCI in subsidiary CI 3,750
75
NCI
3,750
Probem 16-1 concluded 3.
Pedro Company Consolidated Statement of CI Year Ended December 31, 2013 Sales Expenses Consolidated CI Attributable to NCI Attributable to controlling interest
4.
P250,000 191,250 P 58,750 3,750 P 55,000
Pedro Company Statement of Retained Earnings Year Ended December 31, 2013 Retained earnings, January 1 – Pedro Company Consolidated CI attributable to controlling interest Retained earnings, December 31, 2011
5.
P200,000 55,000 P255,000
Pedro Company Consolidated Statement of Financial Position December 31, 2013 Assets Current assets Non-current assets Fixed assets (P662,500 – P132,250) Total assets Liabilities and Stockholders’ Equity Current liabilities Stockholders’ Equity: Controlling interest: Common stock Retained earnings Total Non-controlling interest (P62,500 – P1,000 + P3,750) Total liabilities and equity
P190,000 530,250 P720,250
P100,000
P300,000 255,000 P555,000 65,250
620,250 P720,250
76
Problem 16-2
1.
Eliminations and adjustments: a to c are the same as in Problem 16-1: d.
Depreciate the fixed asset for the current year and one prior year: Retained earnings, Jan. 1 – Sulu (prior year) Expenses (current year) Fixed assets
e.
1,750 1,750
Assign to the NCI their share of the increase in the subsidiary’s Adjusted undistributed earnings of prior year: Retained earnings, January 1- Sulu NCI Retained earnings, January 1, 2013 Retained earnings, January 2, 2012 Increase in undistributed earnings Amortization in prior years Adjusted undistributed earnings NCI % NCI
2.
12,500
Recognize NCI in subsidiary CI: NCI in subsidiary CI NCI
e.
6,250 6,250
2,750 2,750 P170,000 150,000 P 20,000 6,250 P 13,750 20% P 2,750
Pedro Company Consolidated Statement of CI Year Ended December 31, 2013 Sales Expenses (P245,000 + P6,250) Consolidated CI Attributable to NCI Attributable to controlling interest
P300,000 251,250 P 48,750 1,750 P 47,000
77
Problem 16-3 Amortization Schedule Accounts Adjustments Inventory Amortization: Investments Buildings Equipment Patent Trademark Discount on bonds payable Total
Life 1
3 20 5 10 10 5
Annual Amount P 6,250
2010 P 6,250
2011
2012
2013
5,000 12,500 34,500 2,250 2,000 2,500 P 65,000
5,000 12,500 34,500 2,250 2,000 2,500 P 65,000
5,000 12,500 34,500 2,250 2,000 2,500 P 58,750
5,000 12,500 34,500 2,250 2,000 2,500 P 58,750
5,000 12,500 34,500 2,250 2,000 2,500 P58,750
Problem 16-4 Allocation Schedule Price paid Less: Book value of interest acquired Excess Allocation: Equipment Buildings Goodwill (not impaired)
P206,000 140,000 P 66,000 P(40,000) 10,000
(30,000) P 36,000
a.
Investment in Stag Company – 12/31/13 (at acquisition cost)
P 206,000
b.
Non-controlling interest
P -0-
c.
Consolidated CI CI from own operations – Pony (P310,000 – P198,000) P 112,000 CI from own operations – Stag (P104,000 – P74,000) 30,000 Amortization: Equipment (P40,000/8) P5,000 Buildings (P10,000/20) (500) ( 4,500) Consolidated CI P 137,500
d.
Consolidated Equipment Total book value (P320,000 + P50,000) Allocation Amortization (P5,000 x 3 years) Total
P 370,000 40,000 (15,000) P 395,000
78
Problem 16-4 concluded e.
Consolidated Buildings Total book value Allocation Amortization (P500 x 3 years) Total
P 288,000 ( 10,000) 1,500 P 279,500
f.
Consolidated Goodwill (not impaired)
P
g.
Consolidated Common Stock (Pony)
P 290,000
h.
Consolidated Retained Earnings Retained earning, Dec. 31, 2013 – Pony P 410,000 Add: Pony’s share of Stag’s adjusted increase in earnings Net earnings – 2013 (P30,000 – P20,000) P10,000 Amortization ( 4,500) 5,500 Retained earnings, December 31, 2013 P 415,500
36,000
Problem 16-5 a.
Working Paper Elimination Entries, Dec. 31, 2013 (1)
(2)
(3)
(4)
Dividend income Dividends declared – Short To eliminate intercompany dividends.
10,000
Common stock – Short Retained earnings – Short Investment in Short Company To eliminate equity accounts of Short at date of acquisition
100,000 50,000
Depreciable asset Investment in Short Company To allocate excess Depreciation expense Depreciable asset To amortize allocatedexcess
10,000
150,000
30,000 30,000
5,000 5,000
79
Problem 16-5 concluded b.
Pony Corporation and Subsidiary Consolidation Working Paper December 31, 2013 Adjustments
& Eliminations
Debit
Credit
Pony Corporation
Short Company
200,000 10,000 210,000 25,000 105,000 130,000 80,000
120,000 120,000 15,000 75,000 90,000 30,000
230,000 80,000 310,000 40,000
50,000 30,000 80,000 10,000
270,000
70,000
285,000
Statement of FP Cash Accounts receivable Inventory Depreciable asset (net) Investment in Short company
15,000 30,000 70,000 325,000 180,000
5,000 40,000 60,000 225,000
20,000 70,000 130,000 575,000 -
Total
620,000
330,000
795,000
Accounts payable Notes payable Common stock Pony Short Retained earnings, Dec. 31 From above Total
50,000 100,000
40,000 120,000
90,000 220,000
Statement of CI Sales Dividend income Total Depreciation Other expenses Total CI carried forward Retained Earnings Retained earnings, Jan. 1 CI from above Total Dividends declared Retained earnings, Dec. 31 Carried forward
320,000 320,000 45,000 180,000 225,000 95,000
(1) 10,000 (3) 5,000
(2) 50,000 (1) 10,000
(3) 30,000
(4) 5,000 (2)150,000 (3) 30,000
200,000 270,000 620,000
Consolidated
230,000 95,000 325,000 40,000
200,000 100,000
(2)100,000
70,000 330,000
195,000
195,000
285,000 795,000
80
Problem 16-6 a.
Working Paper Elimination Entries (1)
(2)
(3)
Dividend income NCI Dividends declared – Sisa
8,000 2,000 10,000
Common stock – Sisa Retained earnings – Sisa Investment in Sisa stock NCI
100,000 50,000 120,000 30,000
NCI in CI of subsidiary NCI
6,000 6,000
b.
Popo Corporation and Subsidiary Consolidated Working Paper December 31, 2013 Popo Corporation Statement of CI Sales 200,000 Dividend income 8,000 Total revenue 208,000 Depreciation expense 25,000 Other expenses 105,000 Total expenses 130,000 CI 78,000 NCI in CI of Sub. CI carried forward 78,000 Retained Earnings Retained earnings, 1/1 CI from above Total Dividends declared Retained earnings, 12/31 Carried forward Statement of FP Current assets Depreciable assets Investment in Sisa Company Total Accumulated depreciation Current liabilities Long-term debt Common stock Retained earnings , 12/31 From above NCI
Sisa Company
Adjustments
& Eliminations
Debit
Credit
120,000
Consolidated 320,000 320,000 40,000 180,000 220,000 100,000 ( 6,000) 94,000
(1) 8,000 120,000 15,000 75,000 90,000 30,000 (3) 6,000 30,000
230,000 78,000 308,000 40,000
50,000 30,000 80,000 10,000
(2) 50,000
268,000
70,000
284,000
173,000 500,000 120,000 793,000
105,000 300,000 405,000
278,000 800,000 1,078,000
175,000 50,000 100,000 200,000
75,000 40,000 120,000 100,000
250,000 90,000 220,000 200,000
268,000
70,000
(1) 10,000
(2)120,000
(2)100,000 (1) 2,000
(2) 30,000
230,000 94,000 324,000 40,000
284,000 34,000
81
Total
793,000
405,000
166,000
(3) 6,000 166,000
1,078,000
Problem 16-6 - Concluded c. Consolidated Financial Statements Popo Corporation and Subsidiary Consolidated Statement of Financial Position December 31, 2013 Assets Current assets Depreciable assets Less: Accumulated depreciation Total assets Liabilities and Stockholders’ Equity Current liabilities Long-term debt Total liabilities Stockholders’ Equity Com...