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Year 2
Investment in Seashore 400,000 No entry
Income over Subsidiary 400,000
Year 2
Income over Subsidiary 400,000 Dividend Income 480,000
Investment in Seashore 80,000 Dividends, Seashore 480,000
Dividends, Seashore 480,000
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3. Davao Co., & Subsidiary Cebu Co.
Working Paper for Consolidation
For the year ended Dec. 31, 2010
NCI
Davao Cebu Adjust / Elim. Consolidated
Income Statement
Sales 1,050,000 400,000 1,450,000
Inventory, Jan. 1 150,000 80,000
Purchases 900,000 200,000
Inventory, Dec. 31 ( 200,000) ( 100,000)
Cost of Sales 850,000 180,000 1,030,000
Gross profit 200,000 220,000 420,000
Expenses 100,000 80,000 180,000
Net Income from Operation 100,000 140,000 240,000
Dividend Income 30,000 _______ 1)30,000 ______
Net Income 130,000 140,000
Consolidated Net Income 240,000
Share of NCI _______ _______ 56,000 ( 56,000)
NI to Retained Earnings 130,000 140,000 56,000 184,000
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Davao Co., & Subsidiary Cebu Co.
Working Paper for Consolidation
For the year ended Dec 31, 2010
Adjustments
b) At 70% At 30% 12/31/13 12/31/14
Implied Value and Consideration 1,642,857 1,150,000 492,857
Subsidiary Interest: CS (600,000) 420,000 (180,000)
RE (400,000) 280,000 (120,000)
Excess of Cost 642,857 450,000 192,857
Revaluation:
Plant & Equipment (500,000) 350,000 (150,000) 100,000 100,000
Inventories (50,000) 35,000 (15,000) 50,000
50,000 x 70%
Goodwill 92,857 65,000 27,857 _______ ________
P150,000 P 100,000
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2010 2011
c) Books of Parent: Investment in Sweet 1,150,000
Cash 1,150,000
Investment in S Co 35,000
Retained Earnings 35,000
2013 2014
NI of Sweet 350,000 600,000
Less Adjustments 150,000 100,000
200,000 500,000
NI of Paco* 395,000 520,000
Consolidated NI 595,000 1,020,000
Share of NCI 60,000 150,000
Share of Parent P535,000 P870,000
*eliminate div income
8.
Retained Earnings
Bal., beg. Paul 600,000 600,000
Sister 400,000 b) 320,000 80,000
NI carried forward 328,000 150,000 22,000 328,000
Dividends (100,000) ( 50,000) a) 40,000 ( 10,000) (100,000)
Balance, end 828,000 500,000 92,000 828,000
Financial Position
Cash 200,000 50,000 250,000
Accounts Receivable 150,000 50,000 200,000
Inventory 100,000 60,000 b) 30,000 c) 30,000 160,000
Land 150,000 150,000
Building 360,000 b) 50,000 410,000
Equipment 700,000 490,000 b) 25,000 1,215,000
Patent 40,000 b) 50,000 c) 5,000 85,000
Investment 804,000 a) 48,800
b)756,000
Goodwill ????? ________ ________ c) 90,000 90,000
1,954,800 1,200,000 2,560,000
80%
a. Investment Cost 756,000
Equity (700,000 x 80%) 560,000
196,000
Asset Revaluation:
Inventory (70-40 = 30) 80% 24,000
Building (250-200 = 50) 80% 40,000
Equipment (475-450 = 25) 80% 20,000
Patent (90-40 = 50/155) 80% 40,000 124,000
Goodwill 72,000
Total Goodwill (72,000/80%) 90,000
Balance Sheet
Cash 233,000 48,000 281,000
Accounts Receivable 240,000 25,000 265,000
Inventories 150,000 80,000 230,000
Land 150,000 150,000
Building 260,000 b) 50,000 310,000
Equipment 800,000 633,000 b) 25,000 1,458,000
Patent 45,000 b) 45,000 c) 5,000 85,000
Investment In Sister 906,400 a) 102,400
b) 804,000
Goodwill ________ ________ b) 90,000 90,000
2,329,400 1,241,000 2,869,000
c) 2,500 78,000
NCI
Preferred Stock (2,120,000 x 50%) P1,060,000
Common Stock (3,430,000 x 20%)
see first table 686,000
Share in GW 34,000
Net Income-Pref (120,000 x 50%) 60,000
Com (480,000 x 20%) 96,000
Dividends (120,000+48,000) 168,000
P1,768,000
Table for NI
Total Pref S Ord S
600,000 120,000 480,000
Parent 444,000 60,000 384,000
NCI 156,000 60,000 96,000
WPE
Cost Method Equity Method
Dividend Income 252,000 Income From S Co 384,000
Investment in Pref S 60,000 Dividend Income 60,000
Dividends, S Co 312,000 Investment in Pref 60,000
Investment in S 192,000
Dividends, S Co 312,000
If you have the final net income under equity method just add share of NCI in S net income=CNI
2011:
Investment Jan 1, 2011 P3,072,000
Share in S Co net income 304,000
Share in S Co dividends (224,000)
Investment in Ord Shares, 12/31/11 P3,152,000
Table for Net Income:
Total Pref S Ord S
500,000 120,000 380,000
Parent 364,000 60,000 304,000
NCI 136,000 60,000 76,000
WPE
Equity Method Cost Method
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2. Capital Stock Share Co. 350,000
Retained Earnings Share Co. 70,000
Pre-acquisition Earnings 35,000
Goodwill 178,571
Investment in Share Co. 580,000
Share of NCI in GW 53,571
Inventories 100,000
Plant Assets 3,100,000
Capital Stock, Bell 1,000,000
APIC, Bell 400,000
Ret. Earnings, Bell 1,600,000
LT Debts 400,000
Preacquisition Loss 250,000
Gain 210,000
Investment 3,600,000
NCI 2,540,000
Depreciation 155,000
Cost of Sales 100,000
Interest Expense 40,000
Plant Assets 155,000
Inventories 100,000
Expense 40,000
Investment 243,000
Retained Earnings 243,000
Expenses 390,000
Plant Assets 310,000
Long Term debt 80,000
b) Cash 5,700
Dividend Income 5,700
MULTIPLE CHOICE
1. d 2. b 3. d
4. 1) Book Value over subsidiary shares acquired:
Capital Stock P75,000
Retained Earnings 1/190 30,000
Answer: C 105,000 x 95% = 99,750
2) Beginning Balance P 120,000.00
Share in net income 19,000.00
Share In dividends ( 4,750.00)
Ending Balance P134,250.00
3) Consolidated Retained Earnings 12/31/90:
Beginning balance P60,000.00
Net Income 15,000.00
Equity over subsidiary income:
Share in Net Income 19,000.00
Less Dividends 10,000.00
P84,000.00
4) (105,000 + 20,000 5,000) 5% = 6,000+1,066GW Answer: D
5. Answer: D
6. 1) SHE of Sharp (1,320,000 320,000) P1,000,000
Acquisition Cost 1,200,000
Goodwill P 200,000 Answer E
2) Retained Earnings of Owen P1,240,000 Answer: A
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