ADVANCE ACCOUNTING II

LONG EXAMINATION

Name: Score:
Course/Year & Section: Date:
PROBLEM 1
On January 2, 2013 PCO purchase 80% of SCO’s outstanding stock for P648,000,P30,000 of the excess is attributable to
goodwill and the balance is for equipment with estimated remaining life of 10 years. NCI is measured using fair value.
On that date the following information is available.
ORDINARY SHARES RETAINED EARNINGS
PCO P1,050,000 P1,560,000

SCO 240,000 420,000

On December 31, 2013, SCO net income wasPhp105,000 and declared dividend of P36,000 for PCO but paid only
P30,000. PCO reported separate income of P285,000, DIVIDEND paid P138,000. Goodwill have been impaired and should
be reported only P6,000 on December 31, 2013.

Compute the following:

1. Consolidated Net Income attributable to NCI
A. P 21,000
B. P 13,800
C. P 18,750
D. P 18,600

2. Consolidated Net Income attributable to Parent

A. P340,200
B. P360,000
C. P336,000
D. P356,400
3. Retained Earnings at the end of the year
A. P 1,757,400
B. P 2,079,750
C. P 1,762,200
D. P 1,758,000
4. NCI at consolidated financial position at year end
A. P164,250
B. P145,500
C. P166,800
D. P154,500

PROBLEM 2
On January 2, 2013 DCO purchased 80% of CCO’s outstanding stock for P4,750,000. NCI is measured using fair value. On
that date the following information is available; CCO had ordinary share capital P4,000,000 retained earnings,
P1,600,000

 C’s equipment with remaining useful life of 5years had a book value of P2,250,000, fair value P2,630,000. All
other remaining assets have BV equal to FV.

 ALL INTANGIBLE ASSETS except goodwill are having estimated life of 8years.
  DCO net income for 2013 and 2014 ARE P900,000&P1,100,000 RESPECTIVELY

 SCO net income for 2013 and 2014 ARE P340,000&P510,000 RESPECTIVELY

 DCO DIVIDENDS for 2013 and 2014 ARE P220,000&P390,000RESPECTIVELY

 SCO DIVIDENDS for 2013 and 2014 ARE P70,000&P130,000RESPECTIVELY

 DCO’S retained earnings on the date of acquisition was P3,450,000

COMPUTE THE FOLLOWING:

5. CONSOLIDATED RETAINED EARNINGS ATTRIBUTABLE TO PARENT IN 2014

A. P5,272,400
B. P5,333,200
C. P5,238,400
D. P5,232,400

6. PARENT’S SHARE IN THE ADJUSTED UNDISTRIBUTED EARNINGS OF CCO IN 2013

A. P211,200
B. P155,200
C. P216,000
D. P182,400

7. CONSOLIDATED PROFIT IN 2014

A. P1,343,200
B. P1,438,000
C. P1,430,000
D. P1,464,000

8. NCI IN NET ASSET 2014

A. P1,295,600
B. P1,250,000
C. P1,302,400
D. P1,289,500

PROBLEM 3
POCO acquired 80% of the outstanding share of SOCO for P586,250 on June 1, 2013. NCI is measured at fair value in the
amount of P117,500.

SOCO’S SHAREHOLDER’S EQUITY(at the end of this year)---ORDINARY SHARE (P100 PAR),P250,000; APIC,P112,500;
RETAINED EARNINGS, P222,500. All of the BV of assets of SOCO were equal to FV except inventories which is overstated
by P11,000 and equipment which understated by P15,000 with a remaining useful life of 4years.

Both companies use straight line method of depreciation and amortization. The shareholder’s equity of POCO on
January 1, 2013 is composed of Ordinary Share P750,000, Share Premium P175,000, Retained Earnings P525,000

Any goodwill is to be written off by P14,225 at year end.

Net income of the parent and subsidiary for the first year (from the date of acquisition) are P 75,000 and P42,500
respectively. Dividends declared of the parent and subsidiary at the end of the year are P20,000 and P15,000
respectively. There was no additional issuance of share during the year.

COMPUTE THE FOLLOWING:

9. NCI IN NET ASSET AT THE END OF 2013
A. P145,167.50
B. P127,242.50
C. P124,242.50
D. P121,917.50
10. CONSOLIDATED SHAREHOLDERS’ EQUITY FOR 2013
A. P1,520,245
B. P1,642,262.50
C. P1,462,262.50
D. P1,644,587.50

PROBLEM 4
On January 2, 2012, POO Inc. purchased 90% of the outstanding shares of WITY CO. at book value. During the 2012 and
2013, the intercompany sales amounted to P2,000,000 and P4,000,000 respectively. POO consistently recognized 25%
mark up based on cost while WITY recognized 25% profit based on sales. The inventories of the buying affiliate which all
came from intercompany sales transactions show:
December 2012 December 2013
POO INC. P240,000 P160,000
WITY CO. 100,000 40,000
On October 1, 2012 WITY CO. purchased land from POO costing P1,000,000 for P1,500,000. WITY sold this land to
outside party by P1,500,000 on December 1, 2013. On July 1, 2013, the other hand, WITY sold used photocopy
equipment with a carrying value of P60,000 with a remaining life of 3 years to POO forP42,000.

Separate comprehensive Income for the two companies for 2013 shown below:
POO INC. WITY CO.
SALES P25,000,000 P14,000,000
COST OF SALES (15,000,000) (8,400,000)
GROSS PROFIT P10,000,000 P5,600,000
OPERATING EXPENSES (6,000,000) (3,800,000)
OPERATING PROFIT P4,000,000 P1,800,000
LOSS ON SALE OF OFFICE EQUIPMENT (18,000)
DIVIDEND REVENUE 40,000
NET INCOME P4,000,000 P1,822,000

COMPUTE THE FOLLOWING AMOUNTS FOR/AS OF DECEMBER 31, 2013

11. COMPUTE FOR CONSOLIDATED GROSS PROFIT

A. P19,632,000
B. P15,712,000
C. P15,632,000
D. P15,584,000
12. CONSOLIDATED INCOME ATTRIBUTABLE TO PARENT
A. P6,813,300
B. P6,369,000
C. P6,169,800
D. P6,191,300
 13. NCI NET INCOME
A. P189,700
B. P185,700
C. P188,200
D. P184,200
14. CONSOLIDATED OPERATING EXPENSE
A. P9,800,000
B. P9,788,000
C. P9,803,000
D. P9,789,500

PROBLEM 5
On January 1, 2015 PE CO. purchased 80% of the total outstanding stock of SE CO for P620,000. On that date BV=FV of
SE CO. and no goodwill is included on the purchase price. The following was available @ 2015, net income from own
operation PE CO, P150,000; operating loss of SE CO. P20,000; dividends paid by PE, P75,000, by SE CO to PE CO, P12,000.

On july 1,2015 there was a downstream sale of equipment at a gain of P25,000. At This date equipment had a remaining
useful life of 10 years. Also on January 1 2015, there was an upstream sale of furniture with remaining life of 5 yrs on
the date of sale at a loss of P7,500. NCI is measured at FV.

15. HOW MUCH IS CONSOLIDATE NET INCOME ATTRIBUTABLE TO PARENT

A. P97,250
B. P115,050
C. P112,250
D. P103,750

PROBLEM 6

On July 1, 2015, GRC purchased 80% of JPIA’s outstanding stock for P1,600,000. On that date JPIA had P1,000,000
capital stock and retained earnings of P1,400,000. For 2015 GRC had net income of P560,000 from its own operation and
paid dividends of P300,000. JPIA reported net income of P130,000 and paid dividend of P60,000 for 2015. All of JPIA’s
net assets BV=FV. Assume all of the the net income was evenly earned except for the intercompany transaction on Oct 1
2015 where GRC purchased equipment from JPIA for P200,000. The BV of equipment was P240,000 on the date of sale
and remaining useful life of 5years.

16. ON DECEMBER 31, 2015 HOW MUCH IS THE CONSOLIDATED NET INCOME ATTRIBUTABLE TO PARENT?
A. P642,400
B. P930,400
C. P946,400
D. P962,400