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CBE 123 Consolidated FS with answers

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Problem 1 On January 1, 2020, Entity A acquired 70% of outstanding ordinary shares of Entity B at a price of P210,000. On the same date, the net assets of Entity B were reported at P260,000. On January 1, 2020 Entity ...

Problem 1 On January 1, 2020, Entity A acquired 70% of outstanding ordinary shares of Entity B at a price of P210,000. On the same date, the net assets of Entity B were reported at P260,000. On January 1, 2020 Entity A reported retained earnings of P2,000,000 while Entity B reported retained earnings of P200,000. All the assets and liabilities of Entity B are fairly valued except machinery which is undervalued by P80,000 and inventory which is overvalued by P10,000. The said machinery has remaining useful life of four years while 40% of the said inventory remained unsold at the end of 2020. For the year ended December 31, 2020, Entity A reported net income of P1,000,000 and declared dividends of P150,000 in the separate financial statements while Entity B reported net income of P150,000 and declared dividends of P20,000 in the separate financial statements. Entity A accounted the investment in Entity B using cost method in the separate financial statements. 1. What is the non-controlling interest in net assets on December 31, 2020? 2. What is the consolidated net income attributable to parent shareholders for the year ended December 31, 2020? 3. What is the amount of consolidated retained earnings on December 31, 2020? FVCGU 210,000 NCI (330,000 x 30%) 99,000 Total Consideration Transferred 309,000 FVNAA 330,000 Partial Bargain Purchase Gain 21,000 Net Income of Subsidiary 150,000 NCI 99,000 2020 U/S of Dep. Machinery (80,000/4 years) (20,000) 2021 NCI NI 40,800 2020 O/S of Cost of Sale (10,000 x 60%) 6,000 Dividends (30%) (6,000) Adj. NI of Subsidiary 136,000 NCI Net Assets 133,800 NCI % 30% 2021 NCI NI 40,800 2020 Net Income Parent (cost method) 1,000,000 RE Parent 2,000,000 2020 Bargain Purchase Gain 21,000 CNI to Parent 1,102,200 Dividends Subsidiary (70%) (14,000) Dividends Subs. (150,000) 2021 Share in Adj. NI of Subsidiary (70%) 95,200 Consolidated RE 2,952,200 CNI to Parent Shareholder 1,102,200 PAS 27 Cost Method Equity Method 12/31/2020 Historical Cost 210,000 1/1/2020 Initial Measurement 210,000 Investment 2020 Bargain Purchase Gain 21,000 in Subsidiary 2020 Share in NI Subsidiary (70%) 95,200 Dividends Subsidiary (70%) (14,000) BV Investment of Subsidiary 312,200 Net Effect in Profit Dividends from Subsidiary (70%) 14,000 2020 B

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