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Exercise 1
Billing Rate = Gross Profit / Sales = 380,250 / 760,500 = 50%
a) None
b) Sales 175,000
Cost of Sales 175,000
ExerciseExse 2
Unsold Goods P75,000
Cost 37,500
Unrealized Profit 37,500
b) Sales 175,500
Cost of Sales 137,500
Merchandise Inventory 37,500
d) Consolidated C of S: P485,250
380,250+105,000
(137,500)
P347,750
Exercise
Exercise3 3
a) Upward Adjustment / Realized Profit (from last Year) P 37,500
Downward Adjustment / Unrealized Profit (28,000 x 50%) (14,000)
Net upward adjustment P 23,500
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Exercise 4 2010
a) Investment in Stocks 800,000
Cash 800,000
Investment In Stocks, Delilah 56,000
Income from Subsidiary (80,000 x 70%) 56,000
Income from Subsidiary (3,600 x 20%) 720
Investment In Stocks 720
b) Income from Subsidiary 55,280
Investment In stocks 55,280
Sales 10,000
Purchases 10,000
Merchandise Inventory (IS) 720
Merchandise Inventory (BS) 720
Share Capital 850,000
Retained Earnings 150,000
Goodwill 142,857
Investment In Stocks, Delilah 342,857
c) NI of P Co 320,000
Income from Subsidiary (55,280)
Net Income of S Co 80,000
Unrealized Gross Profit (720)
Consolidated Net Income 344,000
d) NCI 342,857
Add: Share in NI 24,000
NCI, Dec 31 366,857
Ex 4 2011
a) Investment In Stocks (90,000 x 70%) 63,000
Income from Subsidiary 63,000
Sales 25,200
Purchases 25,200
MI (IS) 1,680
MI (BS) 1,680
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Share in Net Income 27,000
NCI 12/31 393,857
Ex 5 80% 20%
a) Investment Cost P700,000 170,000
Subsidiary Interest (800,000 x 80%) 640,000 160,000
Excess 60,000 10,000
Revalue of Equipment (50,000+80%) 40,000 10,000
Goodwill (Parent Approach) 20,000 0
Sales 30,000
Cost of Sales (24,000 + 4,000) 28,000 Same entry
Merchandise Inventory 2,000
NI of S Co. 80,000
Realized Profit 1,800
Unrealized Profit (2,000)
Share of NCI in NI 79,800 X20% = 15,960
Exercise 7 75% 25%
a) Investment Cost P2,500,000 902,500
Subsidiary Interest (3,400,000 x 75%) (2,550,00) (850,000)
Preacquisition Earnings (420000 x 6/12 x 75%) ( 157,500) ( 52,500)
Gain from Bargain Purchase 207,500 0==
2010 2011
b) a. CNI: NI of P Co. 630,000 1,750,000
NI of S Co. 210,000 800,000
840,000 2,550,000
Ex 8 Arman Romy
a) Cash 36,000 Machine 36,000
Accum. Depn. 30,000 Cash 36,000
Machine 60,000
Gain from Sale 6,000 Depn. Expense 6,000
Accum. Depn. 6,000
100% 80% 20%
b) Consideration/ Implied Value 550,000 440,000 110,000
Subsidiary Interest (500,000) (400,000) (100,000)
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Goodwill 50,000 40,000 10,000
Machine 24,000
Gain 6,000
Accumulated Depreciation 30,000
Accumulated Depreciation 1,000
Depreciation 1,000
e) Net Income of Arman (255,000+75,000) P 330,000
Less Income from Subsidiary 55,833
Less Net Gain 5,000
Consolidated Net Income 270,000
Exercise 9
c) Investment in Romy 200,000
Income from Subsidiary 200,000
Cash 80,000
Investment in Romy 80,000
Investment 2,000
Income from Subsidiary 2,000 (6,000/3)
d) Income over Subsidiary 202,000
Dividends, Romy Co. 80,000
Investment in Romy 122,000
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Exercise 11 a) P Co. S Co. Debit Credit NCI Consolidated
INCOMESTATEMENT
Sales 1,539,500 585,000 2,124,500
Cost of Goods Sold 425,000 325,000 b) 20,000 730,000
Gross Profit 1,114,500 260,000 1,394,500
Expenses 375,000 145,000 e) 5,000 515,000
Net Inc. from Operation 739,500 115,000 879,500
Dividend 48,000 a) 48,000
NI 787,500 115,000 879,500
Minority Interest ________ _______ * 22,000 22,000
Net Inc. carried forward 787,500 115,000 22,000 857,500
RETAINEDEARNINGS
Bal. Jan. 1 P Co. 780,000 d) 61,000 841,000
S Co. 530,000 e) 5,750 100,250
c) 424,000
NI brought forward 787,500 115,000 22,000 857,500
Less: Dividends 100,000 60,000 a) 48,000 12,000 100,000
RE, end brought forward 1,467.500 585,000 110,250 1,598,500
FINANCIALPOSITION
Cash 250,000 115,000 365,000
Accounts Receivable 370,000 215,000 585,000
Inventories 125,000 45,000 170,000
Land 600,000 150,000 c) 147,500 897,500
Building 260,000 260,000
Equipment 500,000 640,000 e) 50,000 1,190,000
Investment in S Co. 750,000 c) 61,000 c) 854,000 0
c) 20,000
e) 23,000
Goodwill ________ ________ c) 90,000 90,000
Total assets 3,003,000 1,165,000 3,557,500,
Accounts Payable 337,500 155,000 492,500
Accum. Depn. Bldg. 75,000 75,000
Accum. Depn. Equipt. 450,000 50,000 e) 73,750 573,750
Common Stock P Co. 200,000 200,000
S Co. 300,000 c) 240,000 60,000
APIC, P Co. 400,000 400,000
Share of MI in AR & c) 47,500 47,500
GW
RE carried forward 1,467,500 585,000 110,250 1,598,500
CNI ________ ________ ________ ________ 217,750 217,750
3,003,000 1,165,000 1,185,250 1,185,250 3,557,500
MULTIPLE CHOICE
1. b 2. c 3. a 4. b 5. c
6. 1) b 2) c
7. 1) Answer B
2) Sales Price P40,000
Book Value 30,000
Unrealized Gain P10,000 / 5 yrs
Piecemeal realization 2,000
Net unrealized gain P 8,000 Answer B or E
8. 1) Answer A 2) Answer B
9. Unrealized Gain P50,000
Piecemeal realization 5,000
Net unrealized gain P45,000
Exercise 12
a) Investment 1/1/12 827,000
Income from Subsidiary 119,000*
Dividends (64,000)
Investment 12/31 P882,000
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