2 Parent Subsidiary

Net Income 700,000.00 90,000.00

Dividends- N/A- operating income -
a Equipment - 2,000.00
b UGP - 20,000.00 - 5,000.00
RGP 15,000.00 10,000.00
% Acquired 74,400.00 - 74,400.00
Total 769,400.00 18,600.00 788,000.00

1 769,400.00
2 18,600.00
3 788,000.00

4 Parent R/E 12/31/x4 3,500,000.00

Income from Subsidiary 69,400.00
Dividend income (not included above) - 24,000.00
CR/E 3,545,400.00

5 Parent Sales 2,500,000.00

Subsidiary Sales 1,200,000.00
Intercompany Sales - 610,000.00
Consolidated Sales 3,090,000.00

6 Parent COS 1,250,000.00

Subsidiary COS 875,000.00
Intercomapnay SALES - 610,000.00
UGP 25,000.00
RGP - 25,000.00
Consolidated COS 1,515,000.00

7 Consolidated GP 1,575,000.00

2 1 Parent Sales 140,000.00

Subsidiary Sales 120,000.00
Intercompany Sales - 120,000.00
Consolidated Sales 140,000.00

2 Parent COS 96,000.00

Subsidiary COS 75,000.00
Intercomapnay SALES - 120,000.00
UGP 9,000.00
RGP -
 Consolidated COS 60,000.00

3 Parent Subsidiary
Net Income 44,000.00 45,000.00
Div -
a N/A -
b UGP - 9,000.00
% owned 25,200.00 - 25,200.00
69,200.00

4 Use the Formula For Assets

1 Parent Inventory 24,000.00
2 Subsidiary Inventory -
a N/a
b UGP - 9,000.00
Total 15,000.00

4 The following computations are used to check our entries

CoA 423,250.00
NCI PGW 152,250.00
FV 507,500.00
GW 68,000.00

Parent Subsidiary
Net Income 290,000.00 43,500.00
Dividend Income (non-Own Operations) -
a N/A -
b UGP - 4,350.00
RGP N/A (No interco trans yet on this date) 2,666.67
% owned 29,271.67 - 29,271.67
Total 319,271.67 12,545.00
NCI Beg 152,250.00
Dividends of NCI - 8,700.00
UGP 20x5 - 800.00
NCI Ending 155,295.00

Eliminating Entries:
1 Share capital-S 145,000.00
Accumulated Profits-S 362,500.00
Investment in S 355,250.00
NCI 152,250.00
 2 GW 68,000.00
Investment 68,000.00

**** NCI is = to 152,250, the amount computed above.

3 To eliminate intercompany Sales

4 Income from Subsidiary 20,300.00

NCI 8,700.00
Retained Earnings-S 29,000.00
To Eliminate Dividends declared of S

5 COS-S 4,350.00
Inventory 4,350.00

6 Retained Earnings-S 1,866.67

NCI 800.00
COS-S 2,666.67

7 Rertained Earnings-S 41,816.67

Ratained Earnings-P 29,271.67
NCI 12,545.00

NCI end, same as the computed balance above 155,295.00

5 CoA 435,000.00
NCI PGW 101,500.00
FV 507,500.00
Goodwill 29,000.00

Parent Subsidiary Total

Net Income 100,000.00 300,000.00
Dividend Income (non-Own Operations)
a N/A
b UGP - 2,900.00
RGP 4,350.00
% owned 237,680.00 - 237,680.00
Total 342,030.00 59,420.00 401,450.00
NCI Beg 101,500.00
Dividends of NCI - 4,000.00
NCI Ending 156,920.00
 Eliminating Entries:
1 Share capital-S 217,500.00
Accumulated Profits-S 290,000.00
Investment in S 406,000.00
NCI 101,500.00

2 GW 29,000.00
Investment 29,000.00

**** NCI is = to the amount computed above.

3 To eliminate intercompany Sales

4 Income from Subsidiary 16,000.00

NCI 4,000.00
Retained Earnings-S 20,000.00
To Eliminate Dividends declared of S

5 COS-S 2,900.00
Inventory 2,900.00

6 Retained Earnings-P 4,350.00

COS-P 4,350.00

7 Rertained Earnings-S 297,100.00

Ratained Earnings-P 237,680.00
NCI 59,420.00

NCI end, same as the computed balance above 156,920.00

6 *** This problem requires you to work-back your solutions.

CoA 742,400.00
NCI PGW 185,600.00
FV 928,000.00
Goodwill -

Parent Subsidiary
Net Income 245,688.00 232,000.00
Dividend Income (non-Own Operations) -
a - 10,000.00
b UGP - 5,800.00 - 10,440.00
 RGP
% owned 177,248.00 - 177,248.00
Total 417,136.00 44,312.00 461,448.00
NCI Beg 185,600.00
Dividends of NCI -
NCI Ending 229,912.00

Eliminating Entries:
1 SHE at BV 888,000.00
Investment in S 710,400.00
NCI 177,600.00

2 Building 40,000.00
Investment 32,000.00
NCI 8,000.00

**** NCI is = to the amount computed above.

3 To eliminate intercompany Sales

4 Depreciation Expense-S 10,000.00

Equipment 10,000.00

5 COS-P 5,800.00
COS-S 10,440.00
Inventory 16,240.00

6 Rertained Earnings-S 221,560.00

Ratained Earnings-P 177,248.00
NCI 44,312.00

NCI end, same as the computed balance above 229,912.00

7 Elimination Entries for 2016:

a. Ordinary Share 150,000.00
Accumulated Profits, 1/1/2016 ###
Investment in Syanne Company
Non-controlling interest in net assets of Syanne Company
To eliminate equity accounts of Syanne Company as
of the beginning of 2016.
 b. Goodwill 450,000.00
Investment in Syanne Company
To recognize godwill.

c. Dividend Income 52,500.00

Non-controlling interest in net assets of Syanne Company 22,500.00
Dividends Declared - Syanne Company
To eliminate intercompany dividends.

d. Non-controlling interest in net income of Syanne Co. 40,500.00

Non-controlling interest in net assets of Syanne Co.
To establish share of non-controlling in the net income of Syanne Co.

e. Investment in Syanne Company (P135,000 x 70%) 94,500.00

Accumulated Profits - Phlaire Company
To recognize the share of Phlaire Company in the
undistributed income of Syanne Company in 2015.

f. Sales 375,000.00
Cost of Sales
To eliminate intercompany sales in 2016.

g. Accumulated Profits - Phlaire Company 21,600.00

Cost of Sales - Phlaire Company
To eliminate realized profit.

h. Cost of Sales - Syanne Company 15,000.00

Inventory - Phlaire Company
To eliminate unrealized profit.

Consolidated Balances:
a. Sales - Phlaire
Sales - Syanne
Intercompany sales
Consolidated sales

b. Cost of goods sold - Phlaire

Cost of goods sold - Syanne
Intercompany sales
Realized inventory profit - downstream
Unrealized inventory profit - upstream
Consolidated cost of goods sold
c. Inventory - Phlaire
Inventory - Syanne
Unrealized inventory profit - upstream
Consolidated inventory

d. Parent NCI-NIS
Net income - Phlaire 300,000.00
Dividend income (52,500.00)
Net income - Syanne 105,000.00 45,000.00
Realized inventory profit - downstream 21,600.00
Unrealized inventory profit - upstream (10,500.00) (4,500.00)
Balance 363,600.00 40,500.00

e. Consideration Transferred
BV of interest acquired (70%) - squeezed
Goodwill

Composition of SHE of Subsidiary Company:

Ordinary share (assuming no additional issuance of shares)
Accumulated profits (balance as of date of acquisition - 7/1/15)
Total Shareholders' Equity (P903,000 ÷ 70%)

Breakdown of Accumulated Profits - 7/1/15 to 12/31/15:

Accumulated profits, 7/1/15
Net income for six months ending 12/31/15
Dividends declared (assuming no dividends were declared during 2015)
Accumulated profits, 12/31/15 (given)

Computation of NCI in net income of Subsidiary Co. (as of 12/31/2015):

Reported net income of Syanne Company
Multiplied by:
NCI - NIS (12/31/2015)

Share in book value [(903,000 ÷ 70%) x 30%)]

Share in allocation
Share in dividends
2015 (assuming no dividends were declared)
2016 (P75,000 x 30%)
Share in net income
###
 ###
NCI in net assets of Subsidiary Co.

8 Consideration Transferred
BV of interest acquired (90%) - squeezed
Excess of cost over book value
Allocation:
Inventory 10,000.00
Equipment 20,000.00
Building (100,000.00)
Total (70,000.00)
NCI (10%) 7,000.00
Goodwill

Total Parent
Company at fair value 500,000.00 450,000.00
Fair value of net assets (422,222.22) (380,000.00)
Goodwill 77,777.78 70,000.00

2011 NIATOP NCI-NIS

Net income - PS Company 300,000.00
Dividend income (13,500.00)
Net income - SP Company 225,000.00 25,000.00
Amortization of excess:
Inventory 9,000.00 1,000.00
Equipment (20,000 / 5 yrs.) 3,600.00 400.00
Building (100,000 / 10 yrs.) (9,000.00) (1,000.00)
Realized inventory profit - down (2011)
Realized inventory profit - up (2011)
Unrealized inventory profit - down (2011) (2,400.00)
Unrealized inventory profit - down (2012)
Unrealized inventory profit - up (2011) (2,250.00) (250.00)
Unrealized inventory profit - up (2012)
Balance 510,450.00 25,150.00

Elimination Entries related to INTERCOMPANY SALE OF INVENTORIES - 2011:

a. Sales 100,000.00
Cost of Sales
To eliminate intercompany sales.

b. Cost of Sales 4,900.00

Inventory
 To eliminate unrealized profit

2012 NIATOP NCI-NIS

Net income - PS Company 320,000.00
Dividend income (10,800.00)
Net income - SP Company 198,000.00 22,000.00
Amortization of excess:
Inventory
Equipment (20,000 / 5 yrs.) 3,600.00 400.00
Building (100,000 / 10 yrs.) (9,000.00) (1,000.00)
Realized inventory profit - down (2011) 2,400.00
Realized inventory profit - up (2011) 2,250.00 250.00
Unrealized inventory profit - down (2011) (1,000.00)
Unrealized inventory profit - down (2012) (1,500.00)
Unrealized inventory profit - up (2011) (675.00) (75.00)
Unrealized inventory profit - up (2012) (1,260.00) (140.00)
Balance 502,015.00 21,435.00

Elimination Entries related to INTERCOMPANY SALE OF INVENTORIES - 2012:

a. Sales 120,000.00
Cost of Sales
To eliminate intercompany sales.

b. Accumulated Profits 2,250.00

Non-controlling interest in net assets of Subsidiary Company 250.00
Cost of Sales
To eliminate realized profit - upstream.

c. Accumulated Profits 2,400.00

Cost of Sales
To eliminate realized profit - downstream.

d. Cost of Sales 4,650.00

Inventory
To eliminate unrealized profit.

9 Excess of cost over book value

Allocation:
Accounts receivable 5,000.00
Equipment (50,000.00)
 Total (45,000.00)
NCI (30%) 13,500.00
Goodwill

NIATOP NCI-NIS
Net income - Pulie Company 350,000.00
Dividend income (21,000.00)
Net income - Sace Company 140,000.00 60,000.00
Realized inventory profit - downstream 3,000.00
Realized inventory profit - upstream 4,375.00 1,875.00
Unrealized inventory profit - upstream (2,625.00) (1,125.00)
Balance 473,750.00 60,750.00

Sales - Pulie Company

Sales - Sace Company
Intercompany sales in 2017
Consolidated sales

Cost of sales - Pulie Company

Cost of sales - Sace Company
Intercompany sales in 2017
Realized inventory profit - downstream
Realized inventory profit - upstream
Unrealized inventory profit - upstream
Consolidated cost of sales

10 Assuming partial goodwill:

Consideration Transferred
BV of interest acquired (70%)
Excess of cost over book value
Allocation:
Accounts receivable (10,000.00)
Inventory 15,000.00
Equipment 50,000.00
Total 55,000.00
NCI (30%) (16,500.00)
Goodwill

Assuming full goodwill: Total Parent

Company at fair value 495,000.00 346,500.00
Fair value of net assets (445,000.00) (311,500.00)
Goodwill 50,000.00 35,000.00
Year 1 NIATOP NCI-NIS
Net income - P Company 300,000.00
Dividend income (4,900.00)
Net income - S Company 140,000.00 60,000.00
Amortization of excess:
Accounts receivable (7,000.00) (3,000.00)
Inventory 10,500.00 4,500.00
Equipment (50,000 / 5 yrs.) 7,000.00 3,000.00
Realized inventory profit - down (Y1)
Realized inventory profit - down (Y2)
Realized inventory profit - up (Y1)
Realized inventory profit - up (Y2)
Unrealized inventory profit - down (Y1) (500.00)
Unrealized inventory profit - down (Y2)
Unrealized inventory profit - down (Y3)
Unrealized inventory profit - up (Y1) (1,260.00) (540.00)
Unrealized inventory profit - up (Y2)
Unrealized inventory profit - up (Y3)
Balance 443,840.00 63,960.00

Year 2 NIATOP NCI-NIS

Net income - P Company 325,000.00
Dividend income (3,500.00)
Net income - S Company 126,000.00 54,000.00
Amortization of excess:
Accounts receivable
Inventory
Equipment (50,000 / 5 yrs.) 7,000.00 3,000.00
Realized inventory profit - down (Y1) 500.00
Realized inventory profit - down (Y2)
Realized inventory profit - up (Y1) 1,260.00 540.00
Realized inventory profit - up (Y2)
Unrealized inventory profit - down (Y1) (400.00)
Unrealized inventory profit - down (Y2) (1,200.00)
Unrealized inventory profit - down (Y3)
Unrealized inventory profit - up (Y1) (630.00) (270.00)
Unrealized inventory profit - up (Y2) (787.50) (337.50)
Balance 453,242.50 56,932.50

Year 3 NIATOP NCI-NIS

Net income - P Company 350,000.00
Dividend income (2,100.00)
Net income - S Company 154,000.00 66,000.00
Amortization of excess:
Accounts receivable
Inventory
Equipment (50,000 / 5 yrs.) 7,000.00 3,000.00
Realized inventory profit - down (Y1) 400.00
Realized inventory profit - down (Y2) 1,200.00
Realized inventory profit - up (Y1) 630.00 270.00
Realized inventory profit - up (Y2) 787.50 337.50
Unrealized inventory profit - down (Y1) (100.00)
Unrealized inventory profit - down (Y2) (800.00)
Unrealized inventory profit - down (Y3) (500.00)
Unrealized inventory profit - up (Y1) (189.00) (81.00)
Unrealized inventory profit - up (Y2) 0.00 0.00
Unrealized inventory profit - up (Y3) (420.00) (180.00)
Balance 509,908.50 69,346.50

Year 1 Year 2
Accumulated profits, beg (Y1) 100,000.00 100,000.00
EHP - net income
Year 1 443,840.00 443,840.00
Year 2 453,242.50
Year 3
Dividends declared
Year 1 (10,000.00) (10,000.00)
Year 2 (15,000.00)
Year 3
EHP - Accumulated profits 533,840.00 972,082.50
NCI - Accumulated profits (30%):
Beginning 22,500.00 22,500.00
NCI - Net income:
Year 1 63,960.00 63,960.00
Year 2 56,932.50
Year 3
Dividend
Year 1 (2,100.00) (2,100.00)
 Year 2 (1,500.00)
Year 3
Consolidated Accumulated Profits 618,200.00 1,111,875.00

Year 1 Year 2
Share in book value 209,357.00 209,357.00
Share in allocation (16,500.00) (16,500.00)
Share in dividends
Year 1 (2,100.00) (2,100.00)
Year 2 (1,500.00)
Year 3
Share in net income
Year 1 63,960.00 63,960.00
Year 2 56,932.50
Year 3
NCI in net assets of Subsidiary Company 254,717.00 310,149.50

Year 1 Year 2
P Co. Ending Inventory 30,000.00 35,000.00
S Co. Ending Inventory 30,000.00 25,000.00
Overvalued inventory (date of acquisition) (15,000.00)
Amortization of overvalued inventory 15,000.00
Unrealized inventory profit - down (Y1) (500.00) (400.00)
Unrealized inventory profit - down (Y2) (1,200.00)
Unrealized inventory profit - down (Y3)
Unrealized inventory profit - up (Y1) (1,800.00) (900.00)
Unrealized inventory profit - up (Y2) (1,125.00)
Unrealized inventory profit - up (Y3)
Consolidated Inventory 57,700.00 56,375.00

Year 1 Year 2
P Co. Sales 1,000,000.00 1,100,000.00
S Co. Sales 800,000.00 780,000.00
Intercompany sales
Year 1 (32,000.00)
Year 2 (40,000.00)
Year 3
Consolidated Sales 1,768,000.00 1,840,000.00
 Year 1 Year 2
P Co. Cost of Sales 1,000,000.00 1,100,000.00
S Co. Cost of Sales 800,000.00 780,000.00
Intercompany sales
Year 1 (32,000.00)
Year 2 (40,000.00)
Year 3
Realized inventory profit - down (Y1) (500.00)
Realized inventory profit - down (Y2)
Realized inventory profit - up (Y1) (1,800.00)
Realized inventory profit - up (Y2)
Unrealized inventory profit - down (Y1) 500.00 400.00
Unrealized inventory profit - down (Y2) 1,200.00
Unrealized inventory profit - down (Y3)
Unrealized inventory profit - up (Y1) 1,800.00 900.00
Unrealized inventory profit - up (Y2) 1,125.00
Unrealized inventory profit - up (Y3)
Consolidated Cost of Sales 1,770,300.00 1,841,325.00
997,500.00
427,500.00
450,000.00

75,000.00

40,500.00

94,500.00

375,000.00

21,600.00

15,000.00

###
900,000.00
(375,000.00)
###

802,500.00
600,000.00
(375,000.00)
(21,600.00)
15,000.00
###
447,000.00
###
(15,000.00)
###

CNI Or Parent Subsidiary

300,000.00 Net Income 300,000.00 150,000.00
(52,500.00) Div - 52,500.00
150,000.00 UGP - 15,000.00
21,600.00 RGP 21,600.00
(15,000.00) % 94,500.00 - 94,500.00
404,100.00 363,600.00 40,500.00

###
(903,000.00)
450,000.00

150,000.00
###
###

###
135,000.00
-
###

135,000.00
30%
40,500.00

387,000.00
-

-
(22,500.00)

40,500.00
 40,500.00
445,500.00

450,000.00
(317,000.00) 352,222.22
133,000.00

(63,000.00)
70,000.00

NCI
50,000.00
(42,222.22)
7,777.78

CNI
300,000.00
(13,500.00)
250,000.00

10,000.00
4,000.00
(10,000.00)

(2,400.00)

(2,500.00)

535,600.00

100,000.00

4,900.00
 CNI
320,000.00
(10,800.00)
220,000.00

4,000.00
(10,000.00)
2,400.00
2,500.00
(1,000.00)
(1,500.00)
(750.00)
(1,400.00)
523,450.00

120,000.00

2,500.00

2,400.00

4,650.00

81,500.00
 (31,500.00)
50,000.00

CNI or Parent Subsidiary

350,000.00 Net Income 350,000.00 200,000.00
(21,000.00) Dividends - 21,000.00
200,000.00 UGP - 3,750.00
3,000.00 RGP 3,000.00 6,250.00
6,250.00 % owned - 141,750.00 - 141,750.00
(3,750.00) 190,250.00 60,750.00
534,500.00

700,000.00
550,000.00
(75,000.00)
###

350,000.00
200,000.00
(75,000.00)
(3,000.00)
(6,250.00)
3,750.00
469,500.00

500,000.00
(488,500.00)
11,500.00

38,500.00
50,000.00

NCI
148,500.00
(133,500.00)
15,000.00
 CNI
300,000.00
(4,900.00)
200,000.00

(10,000.00)
15,000.00
10,000.00

(500.00)

(1,800.00)

507,800.00

CNI
325,000.00
(3,500.00)
180,000.00

10,000.00
500.00

1,800.00

(400.00)
(1,200.00)

(900.00)
(1,125.00)
510,175.00

CNI
350,000.00
 (2,100.00)
220,000.00

10,000.00
400.00
1,200.00
900.00
1,125.00
(100.00)
(800.00)
(500.00)
(270.00)
0.00
(600.00)
579,255.00

Year 3
100,000.00

443,840.00
453,242.50
509,908.50

(10,000.00)
(15,000.00)
(6,000.00)
###

22,500.00

63,960.00
56,932.50
69,346.50

(2,100.00)
 (1,500.00)
(900.00)
###

Year 3
209,357.00
(16,500.00)

(2,100.00)
(1,500.00)
(900.00)

63,960.00
56,932.50
69,346.50
378,596.00

Year 3
40,000.00
27,000.00

(100.00)
(800.00)
(500.00)
(270.00)

(600.00)
64,730.00

Year 3
950,000.00
820,000.00

(52,000.00)
###
 Year 3
950,000.00
820,000.00

(52,000.00)
(400.00)
(1,200.00)
(900.00)
(1,125.00)
100.00
800.00
500.00
270.00

600.00
###