Title | Chapter 16 - Inter-company Profit Transactions – Inventories |
---|---|
Author | Michael Viñas |
Course | Bachelor of Science in Accountancy |
Institution | University of Caloocan City |
Pages | 16 |
File Size | 321.1 KB |
File Type | |
Total Downloads | 13 |
Total Views | 184 |
CHAPTER 16MULTIPLE CHOICES - COMPUTATIONAL16-1: bConsolidated sales Sales – Papa P 900, Sales – San 500, Elimination of inter-company sales ( 50,000) Consolidated sales P 1,350,Consolidated cost of goods sold Cost of goods sold – Papa P 490, Cost of goods sold – San 190, Eliminations: Realized profi...
CHAPTER 16 MULTIPLE CHOICES - COMPUTATIONAL 16-1:
b Consolidated sales Sales – Papa Sales – San Elimination of inter-company sales Consolidated sales Consolidated cost of goods sold Cost of goods sold – Papa Cost of goods sold – San Eliminations: Realized profit in beginning inventory Unrealized profit in ending inventory Intercompany purchases Consolidated cost of goods sold
16-2:
(
4,000) 10,000 ( 50,000) P 636,000
P P P
60,000 ( 10,000) 50,000 20% 10,000
d CI from own operation – Pat Adjusted CI of Susan: CI – Susan P200,000 Realized profit in beginning inventory (P112,000 x 50%/150%) 37,500 Unrealized profit in ending inventory (P33,000 x 50%/150%) (11,000) Consolidated CI Attributable to NCI (P226,500 x 30%) Attributable to parent
16-4:
P 490,000 190,000
c Comprehensive income – Sisa Unrealized profit in ending inventory – upstream Adjusted CI – Sisa NCI proportionate share NCI in CI of subsidiary
16-3:
P 900,000 500,000 ( 50,000) P 1,350,000
P 200,000
226,500 P 426,500 67,950 P 358,550
b CI from own operations- Patton Unrealized profit in ending inventory – DS (P200,000 x .25) Adjusted CI for own operations – Patton Solis net loss from own operations Consolidated CI
P 300,000 (50,000) 250,000 (150,000) P 100,000
55
16-5:
16-6:
d CI from own operation – Puzon Suazon’s adjusted CI from own operations: CI Unrealized profit in ending inventoryUpstream (P25,000 x 40%) Consolidated CI Attributable to NCI (P100,000 x 25%) Attributable to parent
P110,000 ( 10,000)
100,000 P 300,000 (25.000) P 275,000
2016 P 500,000
2017 P 550,000
b CI from own operation – Pat Unrealized profit in ending inventory: 2016 (P20,000 x .40) 2017 (P30,000 x .50) Realized profit in beginning inventory Realized CI Sun CI Consolidated CI
16-7:
P 200,000
(8,000)
492,000 200,000 P 692,000
a CI from own operation – Pip Adjusted CI from own operation - Sol CI P 250,000 Realized profit in beginning inventoryUpstream (P40,000 x 40%) 16,000 Unrealized profit in ending inventoryUpstream (P70,000 x 30%) ( 21,000) Consolidated CI – 2017
16-8:
16-9:
(15,000) 8,000 543,000 225,000 P 768,000
P 400,000
245,000 P 645,000
a CI from own operations – Popo Unrealized profit in ending inventory – Downstream Realized CI from own operation – Popo Adjusted CI from own operations - Sotto CI P 360,000 Realized profit in beginning inventoryUpstream 10,000 Consolidated CI Attributable to NCI (P370,000 x 5%) Attributable to parent
370,000 P 855,000 18,500 P 836,500
d CI – Sand Company Realized profit in beg. Inventory (P120,000 x .20) Unrealized profit in ending inventory (P360,000 x .20) Amortization of allocated excess P1.000,000 / 5) Adjusted net loss – Sand Company NCI (P48,000 x 40%)
P200,000 24,000 (72,000) (200,000) P(48,000) P(19,200)
P 500,000 ( 15,000) P 485,000
56
16-10: b Gross profit rate of Sit (P200,000 / P500,000) CI from own operations – Pit Adjusted CI of Sit: CI P 75,000 Realized profit in beginning inventoryUpstream (P40,000 x 40%) 16,000 Unrealized profit in ending inventoryUpstream (P25,000 x 40%) ( 10,000) Consolidated CI Attributable to NCI (P81,000 x 10%) Attributable to parent
40% P 200,000
81,000 P 281,000 ( 8,100) P 272,900
16-11: b Gross profit of Sir (P120,000 / P400,000) Consolidated cost of sales Cost of sales – Pig Cost of sales – Sir Eliminations: Realized profit in beginning inventory (P70,000 x 30%) Unrealized profit in ending inventory (P60,000 x 30%) Intercompany purchases Consolidated cost of sales Consolidated CI CI from own operations – Pig Sir’s adjusted CI: CI P 80,000 Realized profit in beginning inventory 21,000 Unrealized profit in ending inventory (18,000) Consolidated CI Attributable to NCI (P83,000 x 10%) Attributable to parent
30%
P 600,000 280,000 ( 21,000) 18,000 (200,000) P 677,000
P 200,000
83,000 283,000 (8,300) P 274,700
57
16-12: a 2015 Pal Corp CI 150,000 Intercompany profit in ending inventory: 2015 (14,000) 2016 2017 Pal CI from own operation 136,000 Solo CI from own operation 100,000 Consolidated CI 236,000 Attributable to NCI 2015(100,000 – 14,000) x 40% 34,400 2016(90,000 +14,000 – 21,000) 40% 2017(160,000 + 21,000 – 24,000) 40% Attributable to Parent 201,600
2016 240,000 14,000 (21,000) 233,000 90,000 323,000
2017 300,000
21,000 ( 24,000) 297,000 160,000 427,000
33,200 289,800
62,800 394,200
16-13: a Total sales Intercompany sales (30,000 + 80,000) Consolidated sales
600,000 (110,000) 490,000
16-14: c Total cost of goods sold (250,000 +120,000) 370,000 Adjustments due to intercompany sale: COGS charged for intercompany sale (20,000 + 50,000) 70,000 COGS charged by: Star (30,000 – 6,000) 24,000 Polo (80,000 – 20,000) 60,000 Total 154,000 Cost of goods sold for consolidated entity: 20,000 x (24,000/30,000) (16,000) 50,000 x (60,000/80,000) (37,500) (100,500) Consolidated cost of goods sold 269,500 16-15: c Polo Corp. CI from own operation (105,000 – 25,000) Unrealized profit in ending inventory-DS (6,000 x 10/30) (2,000) Adjusted Polo Corp. CI from own operation Star Corp. CI from own operation: CI 45,000 Unrealized profit in EI-US (20,000 x 30/80) (7,500) Amortization (20,000/10 years) (2,000) Consolidated CI Attributable to NCI (35,500 x 40%) Attributable to Parent
80,000
78,000
35,500 113,500 (14,200) 99,300
58
16-16: a Pepsi CI from own operation Sarsi CI Unrealized profit in EI (45,000 x 60/180) Consolidated CI Attributable to NCI (75,000 x 30%) Attributable to Parent-2017
160,000 90,000 (15,000)
75,000 235,000 (22,500) 212,500
16-17: a Inventory-Pepsi Less: unrealized profit in books of Sarsi: (135,000 – 90,000) x (30,000/135,000) Inventory-Sarsi Less: unrealized profit in books of Pepsi: (280,000 – 140,000) x (110,000/280,000) Consolidated inventory 12/31/17
P 30,000 (10,000) P110,000
20,000
(55,000)
55,000 75,000
16-18: a Cost of goods sold on sale of inventory on hand-1/1/16: [45,000 x (120,000/180,000)] Cost of goods sold on purchases from Sarsi- 2016 [(135,000 – 30,000) x (90,000/135,000)] Cost of goods sold on purchases from Pepsi- 2016 [(280,000 – 110,000) x (140,000/280,000)] Consolidated cost of goods sold-2017
30,000 70,000 85,000 185,000
16-19: b Pepsi CI Sarsi CI Realized profit in beginning inventory - 2015 Unrealized profit in ending inventory- Sarsi Unrealized profit in ending inventory- Pepsi Consolidated CI – 2017
16-20: b CI from own operations – P Company S Co. adjusted CI: CI – S Unrealized profit in ending inventory – Upstream (P9,000 x 50/150) Realized profit in beginning inventoryUpstream (P6,000 x 50/150) Consolidated CI
220,000 85,000 15,000 (10,000) (55,000) 255,000
P200,000 P30,000 (3,000) 2,000
29,000 229,000
59
Attributable to NCI (P29,000 x 30%) Attributable to parent
8,700 P220,300
16-21: b NCI, December 31, 2016[(P245,000/70%) x 30%] NCI in subsidiary dividends (P20,000 x 30%) -2017 NCI in CI of subsidiary NCI in S Company, December 31, 2017
P105,000 ( 6,000) 8,700 P107,700
16-22: c P Company (P400,000 x 20%) S Company: Sales Cost of goods sold (P400,000 x 80%) Add write down of ending inventory Gross profit
P 80,000
P416,000 P320,000 10,000
330,000 P 86,000
16-23: a Sales Consolidated cost of goods sold Gross profit
P416,000 256,000* P160,000
* Purchases at cost (P400,000 x 80%) Less ending inventory at cost (P80,000 x 80%) Consolidated cost of goods sold
P320,000 64,000 P256,000
Note that cost is lower than market 16-24: a Sales Cost of goods sold Gross profit Other income Other expenses Consolidated CI Attributable to NCI Attributable to controlling interest
P270,000 (1) 171,250 (2) 98,750 (3) 47,000 (4) 51,750 3,350 (5) P 48,400
Supporting computations: (1) Sales: Pablo Company Sally Company Intercompany sales Consolidated sales
P220,000 120,000 (70,000) P270,000
60
(2) Consolidated cost of goods sold: Pablo Company Sally Company Intercompany sales Realized profit in beginning inventory (P15,000 x 25%) Unrealized profit in ending inventory (P20,000 x 25%) Consolidated costs of goods sold (3) Other income: Pablo Company Computer services : (4) Other expenses: Pablo Company Sally Company Computer services Consolidated other expenses (5) NCI in CI of Sally CI Realized profit in beginning inventory (upstream) Unrealized profit in ending inventory (upstream) Adjusted CI NCI proportionate share NCI
P150,000 90,000 ( 70,000)6 ( 3,750) 5.000 P171,250
P 5,000 (5,000) P 40,000 12,000 (5,000) P 47,000
P 35,000 3,750 (5,000) P 16,750 20% P 3,350
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PROBLEMS
Problem 16-1 The computation of the selected consolidation balances are affected by the inter-company profit in downstream intercompany sales as computed below: Unrealized profit in ending inventory, Dec. 31, 2016 – Downstream Intercompany profit (P120,000 – P72,000) Inventory left at year end Unrealized profit, Dec. 31, 2016
P 48,000 x 30% P 14,400
Unrealized profit in ending inventory, Dec. 31, 2017 – Downstream Intercompany profit (P250,000 – P200,000) Inventory left at year end Unrealized profit, Dec. 31, 2017
P 50,000 x 20% P 10,000
a.
b.
c.
Consolidated Sales Apo Bicol Intercompany sales – 2017 Total Cost of goods sold Apo’s book value Bicol’s book value Intercompany sales-2017 Realized profit in beginning inventory – 2017 Unrealized profit in ending inventory – 2017 Consolidated cost of goods sold Operating expenses Apo Bicol Total
P800,000 600,000 (250,000) P1,150,000 P 535,000 400,000 (250,000) ( 14,400) 10,000 P 680,600 P 100,000 100,000 P 200,000
d.
Dividend Income – 0 (eliminated)
e.
NCI in CI of Subsidiary (P100,000 x 20%)
P 20,000
f.
Inventory Apo Bicol Unrealized profit in ending inventory, Dec. 31, 2017 Consolidated inventory
P 298,000 700,000 (10,000) P 988,000
62
Problem 16-1, continued: g. NCI NCI, December 31, 2016 [ (P902,000/80%) x 20%] NCI in dividends paid by Bicol (P50,000 x 20%) NCI in CI of subsidiary (P100,000 x 20%) Total NCI, 12/31/17
P225,500 (10,000) 20,000 P235,500
Problem 16-2 P Company and Subsidiary Consolidated Statement of Comprehensive Income Year Ended December 31, 2017 Sales (P2,000,000 + P1,000,000 – P600,000) Cost of goods sold (Schedule 1) Gross profit Expenses Income before income tax Provision for income tax Consolidated CI after income tax Attributable to NCI (Schedule 2) Attributable to parent
P2,400,000 704,000 1,696,000 600,000 1,096,000 440,000 656,000 44,000 P 612,000
Schedule 1: Cost of sales – P Company Purchases from S Company Intercompany profit in beginning inventory (P60,000 x 25%) Intercompany profit in ending inventory (P76,000 x 25%) Total Cost of sales – S Company Consolidated cost of sales
P 800,000 (600,000) ( 15,000) 19,000 P 204,000 500,000 P 704,000
Schedule 2: CI – S Company Realized profit in beginning inventory – Upstream Unrealized profit in ending inventory – Upstream Adjusted CI NCI proportionate share NCI in CI of subsidiary
P 180,000 15,000 (19,000) P 176,000 x 25% P 44,000
Problem 16-3 a.
Working Paper Eliminating Entries (1)
Dividend income NCI (20%) Dividends declared- D (P32,000 / 80%)
32,000 8,000 40,000
63
To eliminate intercompany dividends.
Problem 16-3, Continued (2)
(3)
(4)
Common stock – S Retained earnings – S Investment in S Co. stock NCI To eliminate equity accounts of S on the date of acquisition.
90,000 220,000
NCI Retained earnings, Jan. 1 Cost of goods sold To eliminate realized profit in beginning inventory
4,000 16,000
Sales
150,000
248,000 62,000
20,000
Cost of goods sold Inventory, Dec. 31 (P45,000 x 33.33%) To eliminated intercompany sales and unrealized profit in ending inventory. (5)
b.
c.
NCI in net income of subsidiary NCI To establish NCI in CI of S Co. computed as follows: Sales Cost and expenses (P140,000 +P20,000) CI Realized profit in beginning inventory – Upstream Unrealized profit in ending inventory – Upstream Adjusted CI NCI proportionate share NCI in CI of subsidiary
135,000 15,000
9,000 9,000
P200,000 160,000 40,000 20,000 (15,000) P 45,000 x 20% P 9,000
Consolidated CI P Company CI from own operations (P250,000 – P32,000) S Company adjusted CI Consolidated CI
P 218,000 45,000 P 263,000
Non-controlling Interest NCI, August 30, 2017 [(P248,000/80%) x 20%] NCI in subsidiary dividends [(P32,000/80%) x 20%] NCI in CI of subsidiary NCI
P 62,000 ( 8,000) 9,000 P 63,000
64
Problem 16-4 a.
b.
Consolidated Sales Reported total sales (P600,000 + P510,000) Intercompany sales (P140,000 + P240,000) Consolidated sales
P1,170,000 (380,000) P 790,000
Consolidated Cost of Goods Sold Cost of goods sold: Pato (P660,000 / 140%) Sales (P510,000 / 120% Amount to be eliminated (P128,000 + P232,000) see entry below Total
P 471,429 425,000 ( 360,000) P 536,429
Elimination of intercompany sales and intercompany profit in inventory: Downstream Sales Sales Inventory (P42,000 x 40/140) Cost of goods sold Upstream Sales Sales Inventory (P48,000 x 20/120) Cost of goods sold c.
d.
140,000 12,000 128,000
240,000 8,000 232,000
Consolidated Comprehensive Income CI from own operations – Pato Unrealized profit in ending inventory – Downstream Adjusted CI – Pato Adjusted CI of Sales Co. CI P20,000 Unrealized profit in ending inventory – Upstream (8,000) Consolidated CI
12,000 P 70,000
Consolidated Inventory, Dec. 31, 2017 Inventory reported – Pato Inventory reported – Sales Unrealized profit in ending inventory (P8,000 + P12,000) Consolidated inventory
P 48,000 42,000 (20,000) P 70,000
P 70,000 (12,000) P 58,000
65
Problem 16-5 P Company and Subsidiary S Company Consolidation Working Paper Year Ended December 31, 2017 P Company
S Company
Eliminations Debit
Statement of CI Sales Dividend income Total revenue Cost of goods sold Operating expenses Total cost and expenses
12,000,000 210,000 12,210,000 7,000,000 4,210,000 11,210,000
1,300,000 750,000 50,000 800,000
CI to retained earnings
1,000,000
500,000
Statement of Retained Earnings Retained earnings, January 1 CI from above Total Dividends declared Retained earnings,12/31 to BS
5,500,000 1,000,000 6,500,000 6,500,000
2,200,000 500,000 2,700,000 210,000 2,490,000
Statement of FP Cash Accounts receivable Inventory Property, plant and equipment Investment in S Company
810,000 425,000 600,000 4,000,000 3,200,000
170,000 445,000 275,000 2,300,000
Total assets
9,035,000
3,1900,000
Accounts payable Common stock Additional paid in capital Retained earnings from above
35,000 1,000,000 1,500,000 6,500,000
100,000 400,000 200,000 2,490,000
(6) 25,000 (2) 400,000 (2) 200,000
9,035,000
3,190,000
3,905,000
1,300,000
Adjustments Credit
(5) 400,000 (1) 210,000 (7) (4)
30,000 40,000
(5) 400,000
Consolidated
12,900,000 12,900,000 7,380,000 4,300,000 11,680,000 1,220,000
(2)2,200,000
(1) 210,000
(3) 400,000
(6) 25,000 (7) 30,000 (4) 40,000 (2)2,800,000 (3) 400,000
5,500,000 1,220,000 6,720,000 6,720,000
980,000 845,000 845,000 6,660,000 -
9,330,000 110,000 1,000,000 1,500,000 6,720,000 3,905,000
9,330,000
Eliminations and Adjustments (1) Eliminate intercompany dividends (2) Eliminate subsidiary’s equity balances (3) Allocate excess to equipment (4) Amortize allocated excess to equipment (5) Eliminate intercompany sale of P400,000 (6) Eliminate intercompany trade balances of P25,000 (7) Eliminate intercompany profit (30%) applicable to P100,000 (P400,000 – P300,000) of intercompany goods in P Company.
66
Problem 16-5, Continued Determination and Allocation of Excess Schedule Price paid by the parent Less book value of interest acquired (100%) Common stock – S Company Additional paid in capital – S Company Retained earnings, Jan. 1 – S Company Excess allocated to equipment
P3,200,000 P 400,000 200,000 2.200,000
Amortization (P400,000/10)
2,800,000 P 400,000 P
40,000
Note: There is no NCI since this is a wholly-owned subsidiary.
Problem 16-6 Determination and Allocation of Excess Schedule: Price paid by the parent (80%) Non-controlling interest [(P425,000/80%) x 20%] Total Less book value of interest acquired: Common stock – So APIC – So Retained earnings Total equity Interest acquired Excess allocated to goodwill
P425,000 106,250 531,250 P200,000 100,000 100,000 P400,000 80%
320,000 P131,250
Fair Value Analysis:
Company fair value Fair value of net assets excluding goodwill Goodwill
Company Implied Fair Value
Parent Price (80%)
NCI Value (20%)
P531,250 400,000 P131,250
P425,000 320,000 P105,000
P106,250 80,000 P 26,250
67
Po Company and Subsidiary So Company Consolidation Working Paper Year Ended December 31, 2017 Po Company
So Company
Statement of CI Sales
880,000
Dividend income Total revenue Cost of goods sold
24,000 904,000 704,000
630,000 504,000
Other expenses Total cost and expenses CI NCI in CI of Subsidiary CI to retained earnings
130,000 834,000 70,000
81,000 585,000 45,000
70,000
45,000
Statement of Retained Earnings Retained earnings, January 1
1,105,000
140,000
CI from above Total Dividends declared Retained earnings,12/31 to BS
70,000 1,175,000 25,000 1,150,000
45,000 185,000 30,000 155,000
216,200 290,000 310,000
44,300 97,000 80,000
Pant assets (net) Investment in S Company
1,991,000 425,000
340,000
Goodwill Total assets
60,000 3,292,200
561,300
Accounts payable Common stock Additional paid in capital Retained earnings from above Non-controlling interest (NCI)
642,200 250,000 1,250,000 1,150,000
106,300 200,000 100,000 155,00...