CHAPTER 17

Correction in; Exercise 11 requirement b) What is the increase (decrease) in the investment
Multiple Choice no. 8. Bond matures January 1, 2011.
EXERCISES
1. a)

Pet Corp.

Stuart Corp.

Jan. 1

Cash
950,000
Bond Discount
50,000
Bonds Payable
July 1 Bond Interest Exp.
40,000
Cash
Dec. 31 Bond Interest Exp.
40,000
Bond Interest Payable
Bond Interest Expense
12,500
Bond Discount

Investment in Bonds
Cash

285,000
285,000

1,000,000
40,000
40,000
12,500

Cash (40,000 x 30%)

Bond Interest Income
Bond Int. Receivable
Bond Int. Income
Investment in Bonds
Bond Int. Income

c. Updating Investment account of Pet Corp:

Investment in Stocks, Stuart Corp.
400,000
Investment from Subsidiary
400,000
b.Trial Balance:
Parent
Subsidiary
Bonds Payable
P1,000,000
Investment in Bonds
Bond Discount
37,500
Bond Interest Income
Bond Interest Expense
92,500
Bond Interest Receivable
Bond Interest Payable
40,000
Income from Subsidiary
400,000
d. Adjustment and elimination entries involving Bond Transactions:
Bonds Payable
300,000
Bond Discount
11.250
Investment in Bonds
288,750
Bond Interest Income
27,750
Bond Interest Expense
27,750
Bond Interest Payable
12,000
Bond Interest Receivable
12,000
Income from Subsidiary
400,000
Investment in Stocks
400,000
Share Capital
112,500
RE
200,000
GW (100/80%)
125,000
Investment in Stocks
350,000
NCI (350/80%x20%)
87,500
e. 1. Parents Income
P 800,000 2. NCI 1/1/
Income from Subsidiary
400,000
Shares in NCI
Share in CNI
P1,200,000
NCI 12/31
Share of NCI 500,000 x 20%
100,000
CNI
P1,300,000
3. Constructive Gain or Loss
none
4. Consolidated Interest Expense (92,500 27,750)
P 64,750
5. Consolidated Bonds Payable (1,000,000 300,000)
P700,000
6. Consolidated Bond Interest Payable (40,000 12,000)
P 28,000
7. Consolidated Bond Interest income
P 0
8. Consolidated Bond Interest Receivable
P 0

12,000
12,000
12,000
12,000
3,750
3,750

P288,750
27,750
12,000

P87,500
100,000
P187,500

Exercise 2
a)
Jan. 1

Parent
Cash
Bond Discount
Bonds Payable
July 1 Bond Interest Expense
Cash
Dec. 31 Bond Interest Expense
Bond Int. Payable
Bond Interest Expense
Bond Discount
b)
Inv. in Stocks, Stuart

Subsidiary
Investment in Bonds
Cash

950,000
50,000

301,000
301,000

1,000,000
40,000
40,000
40,000
40,000
12,500
12,500
40,000

51

Cash
Bond Interest Income
Bond Int. Receivable
Bond Int. Income
Bond Interest Income
Investment in Bonds

12,000
12,000
12,000
12,000
250
250

Inc. from Subs.

Income from Subsidiary
Investment in S Co
Investment in S Co.
Inc. from Subsidiary

40,000

(500,000 net income x 80%)

16,000

Const loss 950,000 x 30#= 285,000 vs 301,000

16,000
4,000
4,000

Piecemeal realization 16,000 / 4

Investment balance is P738,000

Trial Balance:
Bonds Payable
Bond Discount
Bond Interest Expense
Bond Interest Payable
Income from Subsidiary
c. Working Paper entries:

P1,000,000
37,500
92,500
40,000
400,000

Income from Subsidiary

Investment in Stocks
Share Capital
Retained Earnings
Goodwill
Investment in S Co
NCI
Bonds Payable
Bond Interest Income
Loss on Bond Retirement
Bond Discount
Investment in Bonds
Bonds Interest Expense

Investment in Bonds
Bond Interest Income
Bond Interest Receivable

P300,750
23,750
12,000

388,000
388,000
112,500
200,000
125,000
350,000
87,500
300,000
23,750
16,000
11,250
300,750
27,750

12,000
Bond Interest Payable
Bond Interest Receivable
d. Consolidated:
Net Income (800,000 +500,000-16,000+4,000)
Constructive Loss
Interest Income
Interest Expense (92,500 x 70%)
Bonds Payable (1,000,000 x 70%)
Bond Interest Receivable
Bond Interest Payable (40,000 x 70%)
Bond Discount
NCI (87,500+100,000*)
*no share in constructive loss being a downstream sale

12,000
P128,800
P16,000
0
P64,750
P700,000
0
P28,000
26,250
187,500

Exercise 3.
Share in Net Income (750,000 x 80%)
Piecemeal realization
Income from Subsidiary
a) Bonds Payable
Bond Discount
Bond Interest Expense
Bond Interest Payable
Income from Subsidiary
b) Income from Subsidiary
Investment in Bonds
Bonds Payable
Investment in Stocks
Bond Discount
Investment in Bonds
Bond Interest Income
Investment in Stocks
Bond Interest Expense
Bond Interest Payable
Bond Interest Receivable

600,000
4,000
596,000

Pet
1,000,000
25,000
92,500
40,000
596,000
596,000

Investment in Bonds
Bond Interest Income
Bond Interest Receivable

596,000
300,000
8,000
7,500
300,500
23,750
4,000
27,750
12,000
12,000
52

Stuart
300,500
23,750
12,000

c) Consolidated:
Net Income (1,000,000 + 596,000)
Share of NCI (750,000x20%) in NI
NCI (187,500+150,000)
Bond Interest Expense (92,500, x 70%)
Bond Interest Payable (40,000 x 70%)
Bond Discount (25,000 x 70%)
Bond Payable (1,000,000 x 70%)

P1,596,000
150,000
337,500
P 64,750
P 28,000
P 17,500
P700,000

Exercise 4.
PAT / PARENT
a) Investment in Bonds(503150-450*)
Bond Interest Income
Bond Interest Receivable
*3,150/3.5=900x1/2=450

P502,250
22,050
22,500

b) 991,250* / 2
Purchase price
Constructive Loss at purchase date

P495,625
503,150
P( 7,525)

*990,000+(10,000/4x1/2)=991,250
c) Share in Net Income
Downward Adjustment
(7,525-1075*) 80%
Income from Smiley
*7525/3.5=2,150x1/2=1,075
Investment 1/1
Share in NI
Investment 12/31
d)
Working Paper Entries
Income from Subsidiary
Investment in Stocks
Share Capital, S Co.
Retained Earnings, S Co.
Goodwill
Investment
NCI
Bonds Payable
Bond Interest Income
Loss on Bond Retirement
Bond Discount
Bond Interest Expense
Investment in Bonds
Bond Interest Payable
Bond Interest Receivable
e) NCI 1/1
Share in CNI: (100,000-6,450)20%
f) Loss on Bond Retirement
Bonds Payable
Bond Discount
Bond Interest Expense
Bond Interest Payable
Exercise 5:
a ) Investment in Bonds
Bond Int. Receivable
Bond Int. Income
Book of Smiley
Bonds Payable
Disc. in Bonds Payable
Bond Int. Payable
Bond Int. Exp.

SMILEY / SUBSIDIARY
Bonds Payable
P1,000,000
Bond Discount
7,500
Bond Interest Expense
92,500
Bond Interest Payable
45,000

P80,000
( 5160)
P74,840
750,000
74,840
824,840

74,840
74,840
900,000
300,000
750,000
180,000
500,000
22,050
7,525
3,750
23,125
502,700
22,500
22,500
P180,000
18,710
P198,710
P 7,725
500,000
3,750
69,375
22,500

501,800 d)1. Income from Subsidiary

22,500
Dividend
44,100
Investment in Stock
1,000,000
5,000
45,000
92,500

2. SHE
Goodwill
Investment
NCI
3. Bonds Payable
53

321,720
120,000
201,720
1,000,000
30,000
830,000
200,000
500,000

b) Peacemeal Realization
c) Investment 1/1
Share in NI
Piecemeal
Dividend Share
Investment 12/31
Income fr Subsidiary

f) NI of P Co. & S Co.

Income from Subsidiary
Peacemeal
CNI
Share of NCI
Share of P Co.

P2,150

Bonds Interest Income

Investment in Stock
NCI
*net const loss x 80% & 20%
Investment in Bonds
Discount on BP
Bond Int. Expense

824,340
320,000
1,720
(120,000)
P1,026,060
P 321,720 e) Bonds Payable,net
Bonds Int. Expense
Bonds Interest Payable
Bond Interest Receivable
1,000,000
(321,720)
2,150
680,430
(80,430)
6,000,000

44,100
5,160*
1,290*
501,800
2,500
46,250
497,500
46,250
22,500
22,500

Exercise 6.
a) Interest paid (400,000 x .10) of 40,000 less premium amortization (12,000/4) of 3,000= Bond
Interest Expense 12/31 P37,000
Interest received (240,000 x .10 x ) or 12,000 add discount amortization (15,000/3.5 x ) of
2,143= balance of Interest Income 12/31 of P14,143
b) Carrying value 7/1 (400,000+10,500) x 60%= 246,300
Acquisition Price
225,000
Gain on constructive bond retirement
21,300
Less piecemeal realization 21,300/3.5 x )
3,043
Net gain on constructive bond retirement
18,257
c) Premium Amort recorded (9,000/3)= P3,000 x x 60%= 900
Discount Amortization recorded (240,000-225,000 /3.5 /2) = 2,143
Thus: 3,000 x x 60% or 900 + 2,143= 3043
Conideration/Implied value of firm
Subsidiary interest
Goodwill

1,125,000 900,000
1,100,000 880,000
25,000
20,000

Dividend Income
Dividends, Sogood Co

120,000

Share Capital, Sogood

Ret. Earnings, Sogood
Goodwill
Investment in Sogood Stocks
NCI

800,000
300,000
25,000

Bonds Payable 400,000 x 60%

Bond Premium 9,000 x 60%
Bond Interest Income
Bond Interest Expenses 37,000 x x 60%
Bond Investment
Constructive Gain on Bond Retirement

240,000
5,400
14,143

225,000
220,000
5,000
120,000

900,000
225,000

f) Consolidated Income Statement and Retained Earnings

Sales (2,680,000 +1,980,000)
4,660,000
Other Income (266,000 14,143)
251,857
Constructive Gain
21,300
Expenses (2,678,000 + 1,000,000)
(3,678,000)
Other Expenses (580,000 11,100)
( 568,900)
Consolidated Net Income
686,257
NCI 20% of ( 400,000 + 18,257)
83,651
Share of Precy in CNI
602,606
Retained Earnings, 1/1
480,000
Dividends
(250,000)
54

11,100
227,143
21,300

Consolidated Retained Earnings, 12/31

Statement of Financial Position
Current Assets
Other Assets
Goodwill
Total

832,606
1,380,000
3,765,457
25,000
5,170,457

Bonds Payable (400,000 240,000)

160,000
Premium on Bonds Payable (9,0005,400)
3,600
Other Liabilities (2,154,600 + 141,0000
2,295,600
Share Capital
1,600,000
Retained Earnings
832,606
NCI (225,000 + 83,651 30,000)
278,651
Total
5,170,457
g)

Investment in Sogood Stocks

1/1
900,000
Share in NI (400,000 x80%) 320,000 Share in dividends
Share in net constructive
(150,000 x 80%)
Gain (18,257 x 80%)
14,606
12/31 balance

1,114,606
Income from Subsidiary
Share in Net income
Share in net const gain

12/31 balance
h) To prove:
Net income from operation
P268,000
Income from subsidiary
334,606
Share of Precy in CNI
P602,606
i)
Net income (350,000 + 250,000)
P600,000
Dividend Income
(120,000)
Bond interest income
( 14,143)
Bond interest expense
11,100
Gain on bond retirement
21,300
Consolidated net income
P498,257
Share of NCI (250,000 + 18,257) x 20% ( 53,651)
Share of Precy
P444,606
2011
a) Premium amortization 9,000/3= 3,000
Discount amortization 240,000-225,000= 15,000/3.5= 4,286
Piecemeal amortization 3,000 x 60%- 1,800 + 4,286= 6,086
b)

120,000

b)Dividend Income
Dividends, Sogood Co
Investment in Sogood
Ret Earnings, Beg. Precy

320,000
14,606
334,606

80,000
80,000
214,606
334,606-120,000

214,606

Share Capital, Sogood

Ret. Earnings, Sogood 1/1/11
Goodwill
Investment in Sogood Stocks
NCI

800,000
550,000
25,000

Bonds Payable 400,000 x 60%

Bond Premium 6,000 x 60%
Bond Interest Income
Bond Interest Expenses 37,000 x 60%
Bond Investment (227,143 + 4,286)
Investment in Stocks (18,257 x 80%)
NCI (18,257 x 20%)

240,000
3,600
28,286

1,100,000
275,000

22,200
231,429
14,606
3,651
55

c) Consolidated Income Statement and Retained Earnings

Sales (2,500,000 +1,520,000)
4,020,000
Other Income (120,000 28,286)
91,714
Expenses (2,400,000 + 720,000)
(3,120,000)
Other Expenses (550,000 22,200)
( 528,800)
Consolidated Net Income
463,914
NCI 20% of (250,000- 6,086)
48,783
Share of Precy in CNI
415,131
Retained Earnings, 1/1
832,606
Dividends
(200,000)
Consolidated Retained Earnings, 12/31
1,047,737
Statement of Financial Position
Current Assets (920,000+550,000)
Other Assets (2,416,571 + 1,500,000)
Goodwill
Total

1,470,000
3,916,571
25,000
5,411,571

Bonds Payable (400,000 240,000)

Premium on Bonds Payable (6,000-3,600
Other Liabilities (2,150,000 + 144,000)
Share Capital
Retained Earnings
NCI (278,651 +48,783 20,000)
Total

160,000
2,400
2,294,000
1,600,000
1,047,737
307,434
5,411,571

d)
Investment in Sogood Stocks
1/1
1,114,606 Piecemeal realization
Share in NI (250,000 x.8) 200,000 (6,086 x 80%)
Share in dividends
(100,000 x 80%)
12/31 balance
Share in piecemeal

4,869
80,000

1,229,737
Income from Subsidiary
4,869 Share in Net income
12/31 balance

e) To prove:
Net income (300,000-80,000)
Income from subsidiary
Share of Precy in CNI

200,000
195,131

P220,000
195,131
P415,131

f)
Net income (450,000 +350,000)
Dividend Income
Bond interest income
Bond interest expense
Consolidated net income
Share of NCI (350,000 6,086) x 20%
Share of Precy

P800,000
(80,000)
( 28,286)
22,200
P713,914
( 68,783)
P645,131

Exercise 7
a) Investment Balance, Jan 1, 2010
Share in Net Income (150,000 x 80%)
Share in Dividends
Investment Balance, Dec. 31, 2010
Investment Balance, 1/1
Share in Net Income (220,000 x 80%)
Share in Dividends (100,000 x 80%)
Investment Balance, 12/31/11
b) Proceeds from Sale
Carrying Value of Investment sold (587,000 x 2/8)
Gain
56

P 435,000
120,000
( 64,000)
P491,000
P491,000
176,000
( 80,000)
P587,000
P150,000
(146,750)
P 3,250

c) Investment ((587,000x3/4)
Share in NI (250,000x60%)
Share in Dividend (250,000x60%)
Investment
Exercise 8

P440,250
150,000
(72,000)
P518,250

a) Investment Balance, 12/31/11

Share in NI (20,000 x 4/12 x 80%)
Investment Balance, 5/1/12
b) Proceeds from Sale
Carrying Value of Investment Sold (653,667x2/8)
Loss
c) Investment Balance, 5/1/12
Sale of Investment
Share in NI (20,000 x 8/12 x 60%)
Share in Dividends (100,000 x 60%)
Investment Balance, 12/31/12

P587,000
66,667
P653,667
P150,000.00
163,417.00
13,417.00
P653,667.00
(163,417.00)
88,000.00
( 60,000.00)
P518,250.00

Exercise 9
Percent of ownership 8,000/40,000= 20%
P 32,000
128,000
160,000

a) a) Share in NI (160 ,000x20%)

Investment cost
Investment Dec. 31, 04

b) Investment Balance
Income from Subsidiary(80,000 x 20%)

P160,000
16,000
176,000
232,000
48,000
132,000
(60,000)
(24,000)
P504,000

Additional Investment
Income from Subsidiary (160,000* X =80,000 x 60%)
Gain from Business Combination
Remearsurement of investment
Dividends (40,000 x 60%)
Investment Balance, 12/3112
*Ret Earnings 12/31
Dividends
Retained Earnings 1/1
Net Income

P 440,000
40,000
(320,000)
P 160,000
100%

Consideration/Implied Value
Subsidiary Interest
Gain on Bargain Purchase
* 232,000/40% = 580,000x60%

668,000
800,000
(132,000

July 1 Investment
Cash
Revaluation Loss/APIC
Investment in S Co
232,000+176,000=
Fair Value
Loss
c) Working Paper Entries:

60%
348,000*
480,000
(132,000)

40%
320,000
320,000
0

232,000
232,000
60,000
60,000
408,000
348,000
60,000

Income from Subsidiary

Dividends
Investment in Stocks *(80,000x20%)

196,000*
24,000
172,000

+(80,000x60%)+132,000 Gain
Common Stock
Retained Earnings
Pre-Acquisition
Investment In Stocks
Gain
NCI

400,000
320,000
80,000
348,000
132,000
320,000
57

NCI 7/1/
Share in NI
Dividends
NCI 12/31/12

320,000
32,000
(16,000)
P336,000

Exercise10.
a) Revised Ownership Interest
68,000 / 100,000 = 68%
Table 1.1.11
Consideration/Implied Value
Subsidiary Interest
Goodwill
Table 1/1/12
Implied Value/Consideration
(update SHE)
Retain GW
Original (1,200,000+264,000)
Additional (30x20,000)
3,040,000x68%
APIC
Investment in Saymo
Cash
APIC
Exercise 11
a) Before
60%

100%
2,000,000
1,600,000
400,000

60%
1,200,000
960,000
240,000
68%
2,067,200
1,795,200
2,720,000

3,040,000
2,640,000
4,000,000

40%
800,000
640,000
160,000
32%
972,800
844,800
128,000

1,464,000
600,000
2,064,000
2,067,200
32,000
603,200
600,000
3,200
Revised
48,000 / 100,000 = 48%

= Deconsolidate

b)
Investment before the sale
Remeasure base on revised SHE
Decrease by
Loss
Investment in S Co.
d) Investment 1/1/12
Remeasure
500,000 x 48%

P1,200,000 +(60%x4,000,000)
48,000 x P30
24,000
24,000
P1,464,000
(24,000)
240,000
P1,680,000

Exercise 12
Original
vs
Revised
= Retained
48/80 =60%
68/80 = 80%
100%
85%
15%
3,040,000
2,584,000
2,640,000
400,000
2,584,000 (1,464,000+600,000) = 520,000 credit to APIC
a)
b)

Exercise 13
Original
vs
a)
60%
b) Cash (20,000 x P32)
Investment (1,464,000x20/48)
Gain

Revised
28/80 = 35%
640,000

= Deconsolidate
610,000
30,000

Fair value of remaining shares (28,000 x P32)

Book value (1,464,000-610,000)
Gain on Revaluation

P896,000
854,000
P 42,000

Or P32 P30.50= P1.50 x 28,000 shares = P42,000

58

1,464,000
1,440,000
24,000

Exercise 14
Table for Det. & Alloc. Of Excess
Implied Value And Consolidation
Subsidiary Interest
Goodwill
Revised SHE:
1/1
TS

100%
80%
2,625,000
2,100,000
2,500,000
2,000,000
125,000
100,000
3,200,000
(300,000)
2,900,000*
176,000 shares of Pie stocks

CS (2,200,000/10)= 220,000 x 80%=

TS
20,000
Outstanding Shares 200,000
Revised % (176,000/200,000)=88%
Table after TS were acquired
100%
Implied Value
3,025,000
Subsidiary Interest
2,900,000*
Goodwill
125,000
Carrying Value of Investment (2,100,000+560,000) =
Fare Value
Increase Thru APIC

20%
525,000
500,000
25,000

88%
12%
2,662,000
373,000
2,552,000
(348,000)
110,000
15,000
2,660,000
2,662,000
2,000

Exercise 15
a)

Trade Corporations Entries

Investment in Stocks, Market Corp.
Cash
Investment in Stocks, Market Corp. (60,000x70%)
Income from Subsidiary
Cash (20,00 x 70%)
Investment in Stocks, Market Corp.
Global Corporations Entries:
Investment in Trade
Cash
Investment in Stocks, Trade Corp.
Income from Subsidiary
100,000 + 42,000 x 80% = P113,600
(100,000 x 80%) + (60,000 x 56%) = P113,600
Cash (60,000 x 80%)
Investment in Stock, Trade Corp.

150,000
42,000
42,000
14,000
14,000
300,000
300,000
113,600
113,600

48,000
48,000

Investment in Stocks
Income from Subsidiary

100,000
100,000

Table for Investment in Trade

100%
80%
400,000
300,000
500,000
400,000
(100,000) (100,000)
100%
70%
214,286
150,000
200,000
140,000
14,286
10,000

Table For Investment in Market

b)

150,000

WORKING PAPER ADJUSTMENTS & ELIMINATION

Income from Subsidiary
213,600
Dividends, Trade Corp.
48,000
Investment in Stocks, Trade Corp.
165,600
SHE Trade
500,000
Investment in Trade
300,000
Gain from Bargain Purchase
100,000
NCI
100,000
Income from Subsidiary
Dividends, Market Corp.
Investment in Stocks
Capital Stock, Market Corp.

42,000
14,000
28,000
59

20%
100,000
100,000
0
30%
64,286
60,000
4,286

RE, Market Corp.

Goodwill
Investment in stocks
NCI

SHE, Market Corp

200,000
14,286
150,000
64,286

Exercise 16
East
3,000,000
3,000,000

75%
2,250,000
2,250,000

25%
750,000
750,000

GW
Books of South
Investment in East
Cash
Investment in West
Cash
Investment in East
Income from Subsidiary
Investment in West
Income from Subsidiary
Cash
Investment in East
Cash
Investment in West

West
90%
1,444,444 1,300,000
1,400,000 1,260,000
44,444
40,000

10%
144,444
140,000
4,444

2,250,000
2,250,000
450,000
450,000
292,500
292,500
45,000
45,000
150,000
150,000
15,000
15,000

Books of East
Investment in West
Cash
Investment in West
Income from Subsidiary
Cash
Investment in West

850,000
850,000
90,000
90,000
30,000
30,000

Working Paper Entries

Income from subsidiary
Dividend, West
Investment in West
Share Capital
Share Premium
RE
GW
Investment in West
NCI
Income from Subsidiary
Dividend, East
Investment
Share Capital
Share Premium
RE
Investment in East
NCI

135,000
45,000
90,000
1,000,000
200,000
220,000
44,444
1,300,000
144,444
292,500
150,000
142,500
2,000,000
500,000
500,000
2,250,000
750,000

MULTIPLE CHOICE
1. Carrying Value (948x6/9)
Market Value
Gain

P632,000
2) Total interest incurred
602,000
Less amortization
P 30,000 Answer A
Effective interest
Eliminate share of S
For consolidation
60

P72,000
12,000
60,000
40,000 (60,000 x 6/9)
P 20,000 Answer D

2. 1) CV of Bonds (400,000-8,000)=392,000x20% =
Purchase Price
Gain
2) CV of BP 12/31 (400,000-6,000) =
3) Answer C

78,400
76,000
P24,000 Answer C

P394,000 Answer A

(2,400-6,000_ = 1,800

4) 400,000x10% = 40,000 Interest Expense

(8,000/4) = 2,000/42,000 x 80% = P33,600 Answer C
3. NCI (240,000-112,000) Answer B P128,000
3. 1. Answer B
3.2. Answer D
4.

Income from Subsidiary(240,000 x 8/12 x 40%)

(240,000 x 4/12 x 60%)

P 64,000
48,000
P112,000 Answer D

Pre Acquisition Earnings (240,000 x 8/12)= P160,000 Answer A

NCI (240,000-160,000) X 40%= P32,000 Answer E
5. P1,000,000/P100= 10,000 shares x 40% interest= 4,000 + 2,000 addtl.= 6,000
6,000 / (10,000 + 2,000) = 50% Answer A
Acquisition Cost
Subsidiary interest before acquisition:
2,100,000 x 40%=
P 840,000
Subsidiary interest after acquisition:
2,500,000 x 50%=
P1,250,000
Subsidiary interest acquired

P 400,000

Excess of book value over cost

P 10,000 Answer B

Investment Cost Jan 1, 2002

April 1 dividends (60,000 x 40%)
Sept 1 share in net income (240,000 x 8/12 x 40%)
Oct 1 addtle acquisition
Oct 1 dividends (60,000 x 50%)
Dec 31 share in net income (240,000 x 4/12 x 50%)
Investment balance Dec 31, 2002

P800,000
( 24,000)
64,000
400,000
( 30,000)
40,000
P1,250,000 Answer E

P410,000

Non Controlling Interest (240,000 x 8/12 x 60%)

6. Acquisition cost
P675,000
Subsidiary interest (700,000 x 90%)
(630,000)
Pre-acquisition earnings(100,000 x x 90%) ( 45,000)
Excess
0
2) Acquisition cost

P675,000

Dividends (50,000 x 90%)

Share in net income (100,000 x x 90%)
Share in net income (80,000 x x 90%)
Investment balance 7/1/2011
Sold 10% interest
Dividends (30,000 x 80%)
Share in net income (80,000 x x 80%)
Investment balance Dec 31, 2012
1)Proceeds from sale
Book value of sale
Gain

( 45,000)
45,000
36,000
P711,000
( 79,000)
( 24,000)
32,000
P640,000 Answer A

P85,000
79,000
P 6,000 Answer A

61

3) NCI in CNI (100,000 x x 10%)

(80,000 x x 20%)

P 5,000
8,000
P13,000 Answer E

7.
Investment 1/1/10
Net Income (30,000+50,000)80%
Dividends (25,000+25,000)80%
CV 1/1/12
Proceeds
Gain

P250,000
64,000
(40,000)
274,000
300,000
26,000

Answer E

8.
CV of Bonds 948x6/9 =
FV of Purchase
Gain
Interest Payment
Amortization
Effective

632,000
602,000
30,000
72,000
(12,000)
60,000
X 3/9
20,000

9. 1. Answer B
2. Answer D

62

Answer A

Answer D