Multiple Choice Problems
Multiple Choice Problems
Multiple Choice Problems
1. a
Combined equipment amounts
Less: gain on sale
Consolidated equipment balance
Combined Accumulated Depreciation
Less: Depreciation on gain
Consolidated Accumulated Depreciation
P1,050,000
25,000
P1,025,000
P 250,000
5,000
P 245,000
2. a
Original cost of
Accumulated depreciation, 1/1/20x4
Add: Additional depreciation (P1,100,000 P100,000) / 20 years
Accumulated depreciation, 12/31/20x4
3. a
P1,100,000
P 250,000
____50,000
P 300,000
P650,000
__30,000
P620,000
P195,000
___3,000
P192,000
4. a the amount of land that will be presented in the presented in the CFS is the original
cost of P416,000 + P256,000 = P672,000.
5.
The costs incurred by BB to develop the equipment are research and development
costs and must be expensed as they are incurred. Transfer to another legal entity
does not cause a change in accounting treatment within the economic entity.
6. e
Original cost of
Accumulated depreciation, 1/1/20x6 (P100,000 x 50%)
Add: Additional depreciation (P100,000 P50,000) / 5 years
Accumulated depreciation, 12/31/20x6
100,000
50,000
___10,000
P 60,000
7. d
Sales price
Less: Book value
Cost
Less: Accumulated depreciation (50% x P100,000)
Unrealized gain on sale
Less: Realized gain - depreciation (P30,000 / 5 years)
Net unrealized gain, 12/31/20x6
8. e
Eliminating entries:
12/31/20x6: subsequent to date of acquisition
Realized Gain depreciation
Accumulated depreciation
Depreciation expense
[P80,000 - (P100,000 - {P100,000 x 50%])] = P30,000 / 5
years or P15,000 P8,000 = P7,000
P 80,000
P100,000
__50,000
__50,000
P 30,000
___6,000
P 24,000
6,000
6,000
10,000
8,000
Depreciation expense
(P80,000 / 5 years)
Acc. depreciation
16,000
16,000
9. d
Unrealized gain on sales of equipment (downstream sales)
Realized gain on sale of equipment (downstream sales)
depreciation
P90,000 / 10 years
Net
20x4
( 90,000)
through
20x5
-0-
___9,000
9,000
( 81,000)
9,000
10. d
Unrealized gain on sale of equipment (downstream sales)
Realized gain on sale of equipment (downstream
depreciation
P150,000 / 10 years
Net
20x4
( 150,000)
sales)
through
20x5
-0-
___15,000
15,000
( 135,000)
15,000
11. a
Unrealized gain on sale of equipment (upstream sales) : 50,000 30,000
Realized gain on sale of equipment (upstream sales) through depreciation
P20,000 / 5 years
Net
20x4
( 20,000)
20x5
-0-
___4,000
( 16,000)
__4,000
__4,000
12. e
Original cost of
P
100,000
P
40,000
___20,00
0
P
70,000
14. a
Eliminating entries:
12/31/20x7: subsequent to date of acquisition
Realized Gain depreciation
Depreciation expense
Accumulated depreciation
P 48,000
P100,000
__40,000
__60,000
P(12,000)
___4,000
P( 8,000)
2,000
2,000
10,000
10,000
Depreciation expense
(P48,000 / 6 years)
Acc. depreciation
8,000
8,000
15. c
Original cost of
P
100,000
P
80,000
____8,000
P
88,000
P 45,000
P100,000
__80,000
17. b
Eliminating entries:
12/31/20x7: subsequent to date of acquisition
Realized Gain depreciation
Accumulated depreciation
Depreciation expense
[P45,000 - (P100,000 - P80,000) = P25,000 / 5 years or P4,000
P9,000 = P5,000
Should be in CFS Parent Sayex
Depreciation expense
(P20,000 /5 years)
Acc. Depreciation
__20,000
P 25,000
__10,000
P 15,000
5,000
5,000
4,000
4,000
Depreciation expense
(P45,000 / 5 years)
Acc. depreciation
9,000
9,000
18. c
19. b
20.
21. a
The truck account will be debited for P3,000 in the eliminating entry:
Truck
3,000
Gain
15,000
Accumulated depreciation
18,000
Cash
Accumulated
Seller
Truck
Gain
50,000
18,000
Truck
Cash
Buyer
50,000
50,000
53,000
15,000
22. b
Consolidated Net Income for 20x5
P Companys net income from own/separate operations.
Realized gain on sale of equipment (downstream sales) through
depreciation
P Companys realized net income from separate operations*...
S Companys net income from own operations.
Unrealized gain on sales of equipment (upstream sales)
Realized gain on sale of equipment (upstream sales) through depreciation
(P15,000 / 3 years)
S Companys realized net income from separate operations*...
Total
Less: Amortization of allocated excess
Consolidated Net Income for 20x5
Less: Non-controlling Interest in Net Income* *
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent 20x5..
P 98,000
___0
P 98,000
P 55,000
(15,000)
5,000
P 45,000
45,000
P143,000
0
P143,000
18,000
P125,000
Or, alternatively
Consolidated Net Income for 20x5
P Companys net income from own/separate operations.
Realized gain on sale of equipment (downstream sales) through
depreciation
P Companys realized net income from separate operations*...
S Companys net income from own operations.
Unrealized gain on sales of equipment (upstream sales)
Realized gain on sale of equipment (upstream sales) through depreciation
(P15,000 / 3 years)
S Companys realized net income from separate operations*...
Total
Less: Non-controlling Interest in Net Income* *
Amortization of allocated excess
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent..
Add: Non-controlling Interest in Net Income (NCINI)
Consolidated Net Income for 20x5
P 98,000
___0
P 98,000
P 55,000
(15,000)
5,000
P 45,000
P 18,000
____0
45,000
P143,000
18,000
P125,000
_ 18,000
P143,000
P 55,000
( 15,000)
5,000
P 45,000
0
P 45,000
40%
P 18,000
23.
24.
25.
26.
27.
0
P 18,000
2,000
2,000
5,000
5,000
P40,000
10,000
P50,000
(3,000)
P47,000
P 84,000
60,000
P144,000
__ 4,375
P139,625
34. c
Unrealized gain on sale of equipment
Realized gain on sale of equipment (upstream sales) through depreciation
Net
Selling price
Less: Book value, 1/1/20x6
Cost, 1/1/20x2
Less: Accumulated depreciation: P420,000/10 years x 2
years
Unrealized gain on sale of equipment
Realized gain depreciation: P56,000/8 years
20x6
( 56,000)
___7,000
( 49,000)
P
392,000
P420,000
84,000
336,00
0
P 56,000
P 7,000
TLK Corporation will record the purchase at P39,000, the amount it paid. GG
Company had the equipment recorded at P40,000; thus, a debit of P1,000 will
raise the equipment balance back to its original cost from the viewpoint of the
consolidated entity.
39
.
P 45,000
P15,000
(5,000)
(10,000)
P 35,000
x
.40
P 14,000
P 85,000
45,000
P130,000
(10,000)
P120,000
41. b
Eliminating entries:
12/31/20x5: date of acquisition
Restoration of BV and eliminate unrealized gain
Equipment
Gain
10,000
150,00
0
Accumulated depreciation
Granite
160,00
0
Cash
Accumulated depreciation
Equipment
Gain
390,000
160,000
Subsidiary Books
Equipment
Cash
390,000
390,000
400,000
150,000
Mortar
Selling price
Less: Book value, 12/31/20x5
Cost, 1/1/20x2
Less: Accumulated depreciation : P400,000/10 years x 4
years
Unrealized gain on sale of equipment
Realized gain depreciation: P150,000/6 years
P390,000
P400,000
160,000
240,00
0
P
150,000
P
25,000
40,000
40,000
25,000
25,000
Recorded as Subsidiary Books -
Depreciation expense
(P390,000 / 6 years)
Acc. depreciation
45. c
Eliminating entries:
12/31/20x6: subsequent to date of acquisition
Equipment
Retained earnings (150,000 25,000)
65,000
65,000
10,000
100,00
0
135,00
0
46. a
Total gain on the sale = P1,000,000 (P500,000 - P150,000) = P650,000
Unconfirmed gain after three years = 2/5 x P650,000 = P260,000
47. d
Depreciation to 1/1/x3 is P25,000
Depreciation expense for 20x3 and 20x4 is (P85,000 - P25,000)/6 = P10,000 per year
Therefore accumulated depreciation at 12/31/x4 is P45,000.
Net equipment balance is P85,000 - P45,000 = P40,000.
48. b
At the end of two years, the subsidiary reports the equipment at original cost of
P2,500,000 and accumulated depreciation of (P2,500,000/10) x 2 = P500,000.
Depreciation expense is P250,000.
The consolidated balance sheet reports the equipment at original cost of P1,000,000
and accumulated depreciation of P200,000 + ([(P1,000,000 - P200,000)/10] x 2) =
P360,000.
Depreciation expense is P80,000.
Eliminating entries at the end of the second year are:
Accumulated depreciation
Investment in subsidiary
170,000
1,530,000
Equipment
Equipment
1,700,000
200,000
Accumulated
depreciation
Accumulated depreciation
170,000
Depreciation expense
49. d
50. d
200,000
170,000
The subsidiary reports depreciation expense for the year at P500,000 (P2,500,000/5)
and a gain on the sale at P1,750,000 [P2,750,000 - ((P2,500,000 - (3)(P500,000))].
The consolidated statements show depreciation expense for the year at P600,000
(P3,000,000/5) and a gain on the sale at P1,550,000 [P2,750,000 - ((P3,000,000 - (3)
(P600,000))]. Therefore the eliminating entries increase depreciation expense by
51. a
P100,000 and reduce the gain by P200,000, for a net effect on consolidated income
of: P300,000 decrease.
Consolidated Net Income for 20x9
P Companys net income from own/separate operations.
Realized gain on sale of equipment (downstream sales) through
depreciation
P Companys realized net income from separate operations*...
S Companys net income from own operations.
Unrealized loss on sale of equipment (upstream sales)
Realized loss on sale of equipment (upstream sales) through depreciation
P 140,000
___0
P 140,000
P 30,000
20,000
(
0)
P 50,000
50,000
P190,000
0
P190,000
15,000
P175,000
Selling price
Less: Book value, 12/31/20x9
Cost, 1/1/20x4
Less: Accumulated depreciation : P500,000/10 years x 6
years
Unrealized loss on sale of equipment
P180,000
P500,000
300,000
200,00
0
P( 20,000
)
P( 5,000
)
Or, alternatively
Consolidated Net Income for 20x9
P Companys net income from own/separate operations.
Realized gain on sale of equipment (downstream sales) through
depreciation
P Companys realized net income from separate operations*...
S Companys net income from own operations.
Unrealized loss on sale of equipment (upstream sales)
Realized loss on sale of equipment (upstream sales) through depreciation
S Companys realized net income from separate operations*...
Total
Less: Non-controlling Interest in Net Income* *
Amortization of allocated excess
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent..
Add: Non-controlling Interest in Net Income (NCINI)
Consolidated Net Income for 20x9
P 140,000
___0
P 140,000
P 30,000
20,000
(
0)
P 50,000
P 15,000
____0
50,000
P190,000
15,000
P175,000
_ 15,000
P190,000
P 30,000
20,000
0)
P 50,000
0
P 50,000
30%
P 15,000
0
P 15,000
52. b
Consolidated Net Income for 20y0
P Companys net income from own/separate operations.
Realized gain on sale of equipment (downstream sales) through
depreciation
P Companys realized net income from separate operations*...
S Companys net income from own operations.
Unrealized loss on sale of equipment (upstream sales)
Realized loss on sale of equipment (upstream sales) through depreciation
S Companys realized net income from separate operations*...
Total
Less: Amortization of allocated excess
Consolidated Net Income for 20y0
Less: Non-controlling Interest in Net Income* *
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent 20y0..
P 162,000
___0
P 162,000
P 45,000
( 5,000)
P 40,000
40,000
P202,000
0
P202,000
7,500
P194,500
Or, alternatively
Consolidated Net Income for 20y0
P Companys net income from own/separate operations.
Realized gain on sale of equipment (downstream sales) through
depreciation
P Companys realized net income from separate operations*...
S Companys net income from own operations.
Unrealized loss on sale of equipment (upstream sales)
Realized loss on sale of equipment (upstream sales) through depreciation
S Companys realized net income from separate operations*...
Total
Less: Non-controlling Interest in Net Income* *
Amortization of allocated excess
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent..
Add: Non-controlling Interest in Net Income (NCINI)
Consolidated Net Income for 20y0
P 162,000
___0
P 162,000
P 45,000
( 5,000)
P 40,000
P 7,500
____0
40,000
P202,000
7,500
P194,500
_ _ 7,500
P202,000
P 30,000
(
5,000)
P 25,000
0
P 25,000
30%
53. d
Eliminating entries:
1/1/20x5: date of acquisition
Restoration of BV and eliminate unrealized gain
Building
Gain
Accumulated depreciation
Parent Books Sky
Cash
Accumulated depreciation
Building
Gain
7,500
0
7,500
3,000
8,250
11,250
33,000
11,250
Building
Cash
33,000
33,000
36,000
8,250
Sky, 7/1/20x4
Selling price
Less: Book value, 7/11/20x4
Cost, 1/1/20x2
Less: Accumulated depreciation : P36,000/8years x 2.5
years
Unrealized gain on sale of equipment
Realized gain depreciation: P8,250/5.5 years
P33,000
P36,000
11,250
24,750
P 8,250
P 1,500
2,250
Acc. Depreciation
2,250
Depreciation expense
(P33,000 / 5.5 years x
yrs)
Acc. depreciation
56. c
Eliminating entries:
12/31/20x5: subsequent to date of acquisition
Realized Gain depreciation
Accumulated depreciation
Depreciation expense
P8,250 / 5.5 x years or P6,000 P4,500
Should be in CFS Parent Books Sky
3,000
3,000
1,500
1,500
Recorded as Subsidiary Books -
Earth
Depreciation expense
(P24,750 / 5.5 years)
Acc. Depreciation
4,500
4,500
57. d
Eliminating entries:
1/1/20x5: subsequent to date of acquisition
Building
Retained earnings (8,250 750)
Depreciation expense
(P33,000 / 5.5 years)
Acc. depreciation
6,000
6,000
3,000
7,500
10,500
58.
59.
60.
61.
62.
When only retained earnings is debited, and not the non-controlling interest, a
gain has been recorded in a prior period on the parent's books.
d
a
b
b at its original cost or book value.
69. b
20x4: Any intercompany gain should be eliminated in the CFS.
20x5
Selling price unrelated party
Less: Original Book value, 9/26/20x5
Accumulated depreciation, 9/26/20x5
P 100,000
__60,000
P 40,000
P 30,000
Consolidated
40,000
P 70,000
Selling price
Less: Book value
Gain
P (Lorikeet)
Consolidated
P 110,000
__50,000
P 60,000
P 110,000
_30,000
P 80,000
72. d
S
P1,980,0
00
Selling price
Less: Book value: Cost
Accumulat
ed
Unrealized gain on sale of
equipment
P2,000,00
0
___200,00
0
1,800,00
P
P1,440,0
00
P1,980,0
00
*1,320,00
0
Consolidated
P1,440,000
P
1,800,000
**1,200,00
0
660,00
0
__600,000
P
180,000
120,000
P
60,000
P
60,000
P
780,000
P 840,000
Consolidated
Selling price
Less: Book value
Gain
P
100,000
50,000
P 150,000
74. c
S
Selling price
Less: Book value : Cost
Accumulat
ed
Unrealized gain on sale of
Equipment,1/1/20x4
P
P720,000
P
990,000
P1,000,0
00
100,000
P990,000
__900,00
0
Consolidated
P 720,000
P 900,000
*440,000
550,00
0
**400,000
__500,000
P
90,000
40,000
P
50,000
P
50,000
Gain on sale
_________
_
P
170,000
___________
P 220,000
P 14,000
P20,000
10,000
10,000
P 4,000
77. b
Sort
Selling price
Less: Book value : Cost
Accumulat
ed
Unrealized gain on sale of
Equipment, 12/30/20x3
Realized Gain depreciation
(P10,000/6 x 3 yrs)
Net
unrealized
gain,
12/31/20x6
Gain on sale
*P100,000/6 x 3 years = P48,000
***P90,000/6 x 3 years = P45,000
Fort
P 65,000
P
100,000
P
120,000
__30,000
P100,000
__90,000
**50,000
Consolidated
P 65,000
P 90,000
50,000
**45,000
__45,000
P
10,000
__
5,000
P
5,000
P 5,000
_________
_
P 15,000
_________
P 20,000
78. b
Depreciation expense: (P50,000 - P40,000) / 10 years = P1,000 over depreciation
79. b
**Non-controlling Interest in Net Income (NCINI) for 20x4
S Companys net income of Subsidiary Company from its own operations
(Reported net income of S Company)
Unrealized gain on sales of equipment (upstream sales) (P700,000 P600,000)
Realized gain on sale of equipment (upstream sales) through depreciation
(P100,000/10)
S Companys realized net income from separate operations
Less: Amortization of allocated excess
Multiplied by: Non-controlling interest %..........
Non-controlling Interest in Net Income (NCINI) - partial goodwill
P2,000,000
( 100,000)
10,000
P1,910,000
_
0
P1,910,00
0
__40
%
P
764,000
__
0
P
764,000
80. a
**Non-controlling Interest in Net Income (NCINI) for 20y2
S Companys net income of Subsidiary Company from its own operations
(Reported net income of S Company)
Unrealized gain on sale of equipment (downstream sales)
Realized gain on sale of equipment (downstream sales) through depreciation
S Companys realized net income from separate operations
Less: Amortization of allocated excess
P 135,000
(
0)
P 135,000
0
P 135,000
20%
P 27,000
0
P 27,000
81. a
Consolidated Net Income for 20y2
P Companys net income from own/separate operations.
Realized gain on sale of equipment (downstream sales) through
depreciation
P Companys realized net income from separate operations*...
S Companys net income from own operations.
Unrealized gain on sale of equipment (upstream sales)
Realized gain on sale of equipment (upstream sales) through depreciation
S Companys realized net income from separate operations*...
Total
Less: Amortization of allocated excess
Consolidated Net Income for 20y2
Less: Non-controlling Interest in Net Income* *(refer to No. 80)
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent 20y2..
P 200,800
_ 8,000
P 208,800
P 135,000
(
0)
P 135,000
135,000
P343,800
0
P343,800
27,000
P316,800
Sales
Less: Cost of goods sold
Other expenses (including depreciation)
Income tax expense
Net income from own operations
Add: Dividend income
Net income
Sexton, 1/1/20y1
Selling price
Less: Book value, 1/1/20y1
Cost, 1/1/20x1
Less: Accumulated depreciation : P400,000/25 years x 10
years
Unrealized gain on sale of equipment
Realized gain depreciation: P120,000/15 years
Prout
P1,475,00
0
942,000
145,000
__187,200
P
200,800
____80,00
0
P
280,800
Sexton
P1,110,000
795,000
90,000
____90,000
P 135,000
P 135,000
P360,000
P400,000
160,000
240,000
P120,000
P
8,000
Or, alternatively
Consolidated Net Income for 20y2
P Companys net income from own/separate operations.
Realized gain on sale of equipment (downstream sales) through
depreciation
P Companys realized net income from separate operations*...
S Companys net income from own operations.
Unrealized gain on sale of equipment (upstream sales)
Realized gain on sale of equipment (upstream sales) through depreciation
S Companys realized net income from separate operations*...
Total
Less: Non-controlling Interest in Net Income* * (refer to No. 80)
Amortization of allocated excess
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent..
Add: Non-controlling Interest in Net Income (NCINI)
Consolidated Net Income for 20y2
P 200,800
_ 8,000
P 208,800
P 135,000
(
0)
P 135,000
P 27,000
____0
135,000
P343,800
27,000
P316,800
_ _27,000
P343,800
Or, alternatively:
P1,300,000
112,000
P1,188,000
P 800,000
1,040,000
P 240,000
0
0
P 240,000
80%
P192,0
00
0
_192,000
P1,380,000
316,800
P1,696,800
120,000
P1,576,800
0
P1,460,800
104,000
P1,356,800
P
1,075,000
800,000
P
275,000
0
_______0
12/31/20y2
P 275,000
80%
P 220,000
_____0
220,000
P1,576,800
84. c
Non-controlling interest (fulll-goodwill), December 31, 20y2
P
1,200,000
P1,040,0
00
135,00
0
P1,175,0
00
100,00
0
1,075,00
0
P
2,275,200
0
0
P2,275,200
_____)0
P 2,275,00
_
20
P 455,000
85. c
Prout
Selling price
Less: Book value : Cost
Sexton
P300,000
P
360,000
P
P360,000
Consolidated
P 300,000
P 240,000
Accumulat
400,000
*160,000
__240,00
0
ed
Unrealized gain on sale of
Equipment, 1/1/20y1
**48,000
312,00
0
***32,000
_208,000
P
120,000
__16,000
P
104,000
P
104,000
Gain on sale
_________
_
P( 12,000
)
_________
P 92,000
Cost
P400,000
360,000
P 40,000
Accumulated
Depreciation
P160,000
_______
P160,000
Carrying Value
P240,000
360,000
P120,000
Remaining
Life
Depreciation
15 yr
P 16,000
15 yr
24,000
P 8,000
192,000
(2) Equipment
Beginning Retained Earnings - Prout
Accumulated Depreciation
160,000
192,000
40,000
120,000
To reduce beginning consolidated retained earnings by amount of unrealized profit at the beginning of
the year, to restate property and equipment to its book value to Prout Company on the date of the
intercompany sale.
16,000
8,000
8,000
To reverse amount of excess depreciation recorded during current year and recognize an equivalent
amount of intercompany profit as realized
80,000
1,040,000
1,200,000
Entry analysis:
Journal Entry on the books of Sexton to record the sale
Cash
Accumulated Depreciation - Fixed Assets (P360,000/15) x 2 years)
Loss on Sale of Equipment
Plant and Equipment
300,000
48,000
12,000
80,000
1,792,000
448,000
360,000
P400,000
192,000
P 208,000
(300,000)
P 92,000
Note: As of Dec. 31, 20y3, the amount of profit recorded by the affiliates on their books
(P120,000 - P12,000 = P108,000) is equal to the amount of profit considered realized
in the consolidated financial statements (P8,000 + P8,000 + P92,000) = P108,000.
88. d - Investment in subsidiary, 12/31/20x5 (cost model) P700,000).
Date of Acquisition (1/1/20x4)
Partial
Fair value of consideration given.P 700,000
Less: Book value of SHE - Subsidiary):
(P300,000 + P500,000) x 80%........................... 640,000
Allocated Excess..P 60,000
Less: Over/Undervaluation of Assets & Liabilities
Increase in Bldg. (P75,000 x 80%) 60,000
Goodwill ..P
0
Full
89. d
Dividend paid or declared SP 50,000
x: Controlling Interest %.
80%
Dividend income of Parent..P 40,000
90. d
Consolidated Net Income for 20x5
P Companys net income from own/separate operations.
Net unrealized gain on sale of equipment (downstream sales) through
depreciation P35,000 P875)
P Companys realized net income from separate operations*...
S Companys net income from own operations.
Unrealized gain on sales of equipment (upstream sales)
Realized gain on sale of equipment (upstream sales) through depreciation
S Companys realized net income from separate operations*...
Total
Less: Amortization of allocated excess
Consolidated Net Income for 20x5
Less: Non-controlling Interest in Net Income* *
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent 20x5..
P 300,000
34,125
P 265,875
P 150,000
(30,000)
4,500
P 124,500
124,500
P390,375
3,000
P387,375
24,300
P363,075
Or, alternatively
Consolidated Net Income for 20x5
P Companys net income from own/separate operations.
Net unrealized gain on sale of equipment (downstream sales) through
depreciation P35,000 P875)
P Companys realized net income from separate operations*...
S Companys net income from own operations.
Unrealized gain on sales of equipment (upstream sales)
Realized gain on sale of equipment (upstream sales) through depreciation
S Companys realized net income from separate operations*...
Total
Less: Non-controlling Interest in Net Income* *
Amortization of allocated excess
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent..
Add: Non-controlling Interest in Net Income (NCINI)
Consolidated Net Income for 20x5
P 300,000
34,125
P 265,875
P 150,000
(30,000)
4,500
P 124,500
P 24,300
3,000
124,500
P390,375
27,300
P363,075
_ 24,300
P387,375
P 150,000
( 30,000)
4,500
P 124,500
3,000
P 121,500
20%
P 24,300
0
P 24,300
20%
Non-controlling Interest (in net assets) partial...
+: NCI on full goodwill....
Non-controlling Interest (in net assets) full..
* 20x5: P3,000 x 2 years; 2012: P3,000 x 3 years;
** P30,000 P4,500 realized gain in 20x5 = P25,500.
P 208,700
0
P 208,700
P 235,300
0
P 235,300
P 3,000 x 2 years. .(
6,000)
Upstream Sale 20x5 or prior to 12/31/20x5,
Net unrealized gain (P30,000 P4,500).
( 25,500)
P 168,500
x: Controlling Interests %..
80%
134,800
RE P, 12/31/20x5 (equity method) = CRE, 12/31/20x5.
P1,140,675
94. c refer to No, 93 computations.
95. b refer to No. 93 for computations
96. d refer to No. 93 for computations
97. b
P 200,000
___0
P 200,000
P100,000
70,000
95,000
15,000
( 52,000)
( 23,000)
P205,000
205,000
P405,000
0
P405,000
35,600
P369,400
Sales price
Less: Cost
Unrealized (loss) gain
S3
145,000
160,000
( 15,000)
S2
197,000
145,000
52,000
S1
220,000
197,000
23,000
Or, alternatively
Consolidated Net Income for 20x4
P Companys net income from own/separate operations.
Realized gain on sale of equipment (downstream sales) through
depreciation
P Companys realized net income from separate operations*...
S3 Companys net income from own operations.
P 200,000
___0
P 200,000
P100,000
70,000
95,000
15,000
( 52,000)
( 23,000)
P205,000
205,000
P405,000
P 35,600
____0
_ 35,600
P369,400
_ _35,600
P405,000
S3
S2
S1
P
100,000
15,000
P
115,000
0
P
115000
20%
P 23,000
P
70,000
( 52,000)
P
18,000
0
P
18,000
30%
P
5,400
0
P
5,400
P 95,000
0
P 23,000
( 23,000)
P 72,000
0
P
72,000
10%
P
7,200
P
0
7,200
101. b
Non-controlling Interest in Net Income (NCINI) for 20y2
S Companys net income of Subsidiary Company from its own operations
(Reported net income of S Company)
Unrealized gain on sales of equipment (upstream sales) year of sale
Realized gain on sale of equipment (upstream sales) through depreciation
(P14,500 P9,000) / 5 years
S Companys realized net income from separate operations
Less: Amortization of allocated excess
Multiplied by: Non-controlling interest %..........
Non-controlling Interest in Net Income (NCINI) - partial goodwill
Less: NCI on goodwill impairment loss on full-goodwill . . . . . . . . . . . . . . . . . . . . .
Non-controlling Interest in Net Income (NCINI) full goodwill . . . . . . . . . . . . .
P 40,000
1,100
P 41,100
0
P 41,100
20%
P 8,220
0
P 8,220
P225,000
45,000
___4,500
P184,500
104. c
105 c
Majority percentage
Income from Cliff
90%
P166,050
P288,00
0
45,000
11,250
P
22,500
P254,25
0
108.
109.
110.
111.
P68,250
P50,000
__1,250
48,750
P19,500
P 2,000
20x4
90,000
( 19,500)
_ 1,500
72,000
112. b
Share in subsidiary net income (120,000 x 90%)
Realized gain on sale of equipment (downstream sales) through depreciation
Net
20x5
108,000
_ 2,000
110,000
20x6
117,000
_ 2,000
119,000
113. d
114. c
Smeder, 1/1/20x4
Selling price
Less: Book value, 1/1/20x4
Cost, 1/1/20x4
Less: Accumulated depreciation
Unrealized gain on sale of equipment
Realized gain depreciation: P12,000/6 years
115. b
P84,000
P120,000
__48,000
72,000
P12,000
P 2,000
20x4
22,400
( 9,600)
_ 1,600
14,400
116. c
Share in subsidiary net income (32,000 x 80%)
Realized gain on sale of equipment (upstream sales) through depreciation
P2,000 x 80%
Net
117. d
Eliminating entries:
1/1/20x4: date of acquisition
Restoration of BV and eliminate unrealized gain
Equipment
Gain
Accumulated depreciation
Parent Smeder
Cash
Accumulated depreciation
Equipment
Gain
20x5
25,600
_ 1,600
27,200
36,000
12,000
48,000
Subsidiary - Collins
84,000
48,000
Equipment
Cash
84,000
84,000
120,000
12,000
Smeder, 1/1/20x4
Selling price
Less: Book value, 1/1/20x4
Cost, 1/1/20x4
Less: Accumulated depreciation
Unrealized gain on sale of equipment
Realized gain depreciation: P12,000/6 years
P84,000
P120,000
__48,000
Eliminating entries:
12/31/20x4: subsequent to date of acquisition
Realized Gain depreciation
Accumulated depreciation
Depreciation expense
P12,000 / 6 years or P14,000 P12,000
Should be in CFS Parent Smeder
Depreciation expense
(P72,000 /6 years)
Acc. Depreciation
12,000
12,000
72,000
P12,000
P 2,000
2,000
2,000
Recorded as Subsidiary - Collins
Depreciation expense
(P84,000 / 6 years)
Acc. depreciation
14,000
14,000
Combining the eliminating entries for 1/1/20x4 and 12/31/200x4, the net effect
of accumulated depreciation would be a net credit of P46,000 (P48,000
P2,000).
118. c
Unrealized gain on sale of equipment
20x4
( 12,00
0)
___2,000
( 10,000)
119. d
Eliminating entries:
5/1/20x4: date of acquisition
Restoration of BV and eliminate unrealized gain
Cash
Loss
5,000
5,000
Parent Stark
Cash
Loss
Land
Subsidiary - Parker
80,000
5,000
Land
Cash
85,000
85,000
85,000
Selling price
Less: Book value, 5/1/20x4
Unrealized gain on sale of equipment
Stark
P 80,000
_85,000
P ( 5,000)
Parker
P 92,000
__80,000
P 12,000
Consolidated
P 92,000
_85,000
P 7,000
5,000
5,000
122. e
Share in subsidiary net income (200,000 x 90%)
Unrealized loss on sale of land (upstream sales): P5,000 x 90%
Net
20x4
180,000
_ 4,500
184,500
20x4
180,000
_ 4,500
184,500
123. d
124. b
Selling price
Less: Book value, 5/1/20x4
Unrealized gain on sale of equipment
Stark
P 80,000
_85,000
P ( 5,000)
Parker
P 92,000
__80,000
P
12,000
Consolidated
P 92,000
_85,000
P 7,000
20x6
198,000
_ ( 4,500)
193,500
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