Professional Documents
Culture Documents
Discussant:
Carolino, Dean Victor
Fetalcorin, Julie Jorraine
De Guzman, Jessa E.
Bias, Czarina Kate
CBET-01-601E
MC 4-H
On
December
31,2013,
Pureza
Corporation purchased 80% of the
outstanding shares of Sta. Mesa
Company at a cost of P400,000. On
that date, Sta. Mesa Company had
P150,000 of Ordinary share capital and
P250,000 of Retained Earnings.
For 2014, the operating results of Pureza
Corporation and Sta. Mesa
Company
Pureza
Sta. Mesa
Corporation Corporation
are:
Net income from own operations
P200,000
P100,000
Dividends Paid
50,000
20,000
C. P19,160
B. P16,000
D. P20,000
C. P279,160
B. P275,160
D. P299,160
C. P279,160
B. P275,160
D. P299,160
C. P96,000
B. P90,000
D. P116,000
Solutions:
1. D. P20,000
Net income from own operations of subsidiary (Sta. Mesa)
P100,000
Multiply by Non-controlling interest percentage
20%
NON-CONTROLLING INTEREST NET INCOME
P 20,000
CNI
Pureza
Sta. Mesa
Net income from own operation
Impairment loss on goodwill
Realized profit in inventory, beg
(4,800 x 25% / 125%)
Unrealized profit in inventory, end
(9,000 x 25% / 125%)
P 300,000
P 200,000
(4,000)
(4,000)
960
960
(1,800)
P
295,160
P 20,000
(1,800)
P 195,160
P 100,000
80,000
P
P 100,000
Consolidated NI
NonNet Income
Attributable Controlling
to parent
Interest NI
Net Income of S
Co.
P 100,000
P 80,000
Net Income of P
Co.
200,000
200,000
Impairment Loss
on goodwill
P 20,000
(4,000)
(4,000)
Realized Profit in
Inventory, beg
960
Unrealized Profit in
inventory, end
(1,800)
P
295,160
960
(1,800)
P
275,160
P 20,000
Consideration Transferred
P 400,000
NCI (400,000 x 20%)
80,000
Total
480,000
FV of Assets Acquired
(400,000)
Goodwill December 31, 2013
80,000
Less Impairment
4,000
Goodwill December 31, 2014
P
76,000
MC 4-L
Acacia Corp. has 80% interest in Molave Co. By the
end of the current year Acacia Corp. holds
inventory purchased from Molave for P520,000
at cost plus 25% mark up. The groups
consolidated statement of financial position has
been drafted without any adjustments in
relation to this inventory.
Under PFRS 10 Consolidated Financial Statements,
what adjustments should be made to the draft
consolidated statement of financial position
figures for non-controlling interest and retained
earnings?
A.Non-controlling
No Change
Reduce by
P104,000 Earnings
interest
Retained
B.
No Change
C.
Reduce by P28,000
P112,000
D.
Reduce by P20,800
Reduce by P140,000
Reduce by
Reduce by P83,200
NON
CONTROLLING
INTEREST NET INCOME AND
NON
CONTROLLING
INTEREST ARE NOT AFFECTED
BY
DOWNSTREAM
SALES.
(Page 218, under Key Points
5th bullet)
The
amount
reported
as
CONSOLIDATED NET INCOME is
the combined net income of the
parent and all the subsidiaries
after taking into consideration
the various adjustments for
intragroup
balances
and
transactions, intragroup profit
and
the
impairment/
amortization / depreciation of
differentials. (Page 175, under
consolidated net income, 2nd
MC4-F
CNI
Net income from own operation
P70,000
Realized profit in Inv. Beginning
Unrealized profit in Inv. End
(1,600)
Consolidated net income
P69,200
NCI
13,840
Pancho Co.
Sanchez Co
P120,000
800
(4,000)
P185,200
P116,000
55,360
P171,360
P120,000
(4,000)
800
(1,600)
P116,000
640
160
MC4-R
The following working paper elimination entry appeared
in the consolidation worksheet of Parker Company and its
subsidiary, Parker Company, to eliminate unrealized
intragoup gain in machinery and its related depreciation
(ignoring tax effect):
Retained Earnings, Parker (P450,000x.90) P 405,000
Retained Earnings, Starter (450,000 x .10)
45,000
Accumulated Depreciation - Parker
300,000
Machinery - Parker
P600,000
Depreciation - Parker (SLM - P600,000/4)
150,000
Machinery
P600,000
Divided by accumulated Depreciation
Years depreciated
300,000
2
MC 4-P
On January 5, 2014, Portero Inc, sold to its 80%owned subsidiary, Sotero Company, a machine
for P120,000. At that time, the machine had a net
book value of P90,000. Sotero estimated the
remaining life of the machine to be six years.
Assume that in 2014, Portero, Inc. and Sotero
Company reported net income of P80,000 and
P100,000 respectively, from their own operations.
1. Determine the non-controlling interest net
income from 2014.
A. P10,000
C. P16,000
B. P11,000
D. P20,000
Solutions:
1.
D. P20,000
C. P144,000
B. P135,000
D. P155,000
2.D. P155,000
Net income from own operations:
Portero
P 80,000
Sotero
100,000
Realized gain on sale of machine
Gain on sale of Machine
P30,000
Divided by:
Estimated remaining life
of machine
6 yrs
5,000
Unrealized gain on sale of machine
Selling Price
P120, 000
Less:
Net Book Value
90, 000 (30,000)
NET INCOME
ATTRIBUTABLE TO PARENT
P135,000
NON CONTROLLING
INTEREST NET INCOME
P20,000
Consolidated
Net Income
Unrealized Gain
on Sale of
Machine
(P30,000)
Net Income
Attributable to
Parent
NonControlling
Interest
3. B. P75,000
Book value of machine,
Jan 5, 2014
P 90,000
Less Depreciation
for 2014:
BV(01/05/14)
P90,000
DIVIDED BY:
Estimated remaining
life
6 yrs 15,000
Book value of machine
Dec 31, 2014
P 75,000
Exercise 4-3
In 2014, Palawan company acquired
inventory from Samar Company, its 75%owned subsidiary, for P200, 000. Samars
cost was P160, 000. at December 31, 2014,
Palawans statement of financial position
showed P80, 000of intragroup acquired
inventory on hand.
Instruction: Prepare the elimination entries
required in 2014.
a.)
Sales P200, 000
Cost of Sales P200, 000
To eliminate intragroup sales and purchases
b.)
Cost of Sales P16, 000
Inventory P16, 000
To eliminate unrealized profit in the ending
inventory
Pg.213 Under
Consolidated Working
Paper Eliminations