1.

Stain Corporation is an 80%-owned subsidiary of Paint of P Corporation and S Company for 2018 are as
Corporation. During 2017 Stain sold merchandise that follows:
cost P96,000 to Paint for P128,000. Paint's ending P Corporation S Company
inventory at December 31, 2017 contained unrealized Sales 633,600 350,400
profit of P6,400 from the intercompany sales. During Cost of Goods Sold 384,000 192,000
2018 Stain sold merchandise that cost P112,000 to Operating expenses 115,200 96,000
Paint for P152,000. One-half of this remained unsold Separate income from
by Paint at December 31, 2018 For 2018 Paint's own operations 134,400 62,400
separate income was P200,000 and Stain's reported
net income was P152,000. Intercompany sales from P to S for 2017 and 2018 are
The consolidated net income for 2018 will be: summarized as follows:
a. P302,000 c. P310,720 Cost Selling Unsold
b. P338,400 d. P274,500 Price at year-
end
2. P Company acquired a 90% interest in S Company in Intercompany sales
2016 at a time when S Company's book values and fair – 2017 240,000 374,400 30%
values were equal to one another. On January 1, 2018, Intercompany sales
S sold a machine with a P24,000 book value to P – 2018 168,000 264,000 40%
Company for P48,000. P depreciates the machine over
10 years using the straight line method. Separate 6. The 2018 consolidated income statement will show
incomes for P and S for 2018 are as follows: cost of goods sold of
P Co. S. Co. a. P 310,080 c. P 384,000
Sales P960,000 P560,000 b. P 576,000 d. P 192,000
Gain on sale of machinery 24,000
Cost of goods sold (400,000) (152,000) On January 1, 2018. P Corporation purchased 75% of the
Depreciation expense (240, 000) (72,000) common stock of S Company. Separate balance sheet data
Other expenses (96,000) (240,000) for the companies at the combination date are given
Separate incomes P224,000 P120,000 below:
P Corporation S Company
The consolidated net income for 2018 is: Cash P9,600 P82,400
a. P344,000 c. P310,400 Accounts receivable 57,600 10,400
b. P322,400 d. P312,560 Inventory 52,800 15,200
Land 31,200 12,800
3. On January 1, 2016, Subsidiary Company purchased a Plant assets 280,000 120,000
delivery truck with an expected useful life of 5 years Accumulated (96,000) (24,000)
and scrap value of P6,400. On January 1, 2018, depreciation
Subsidiary Company sold the truck to Parent Company Investment in Ucky 156,800 ________
and recorded the following entry: Total assets P492,000 P216,800
Debit Credit Accounts payable P82,400 P56,800
Cash 40,000 Capital stock 320,000 120,000
Accumulated depreciation 14,400 Retained earnings 89,600 40,000
Truck 42,400 Total equities P492,000 P216,800
Gain on sale of truck 12,000
At the date of combination the book values of S Company’s
Parent holds 60% of Subsidiary's voting shares. net assets was equal to the fair value of the net assets
Subsidiary reported net income of P44,000, and Parent except for S Company’s inventory which has a fair value of
reported separate net income of P78,400 for 2018. P24,000. Indicate in each of the questions what the
In preparing the consolidated financial statements for consolidated balance would be for the requested account,
2018, depreciation expense will be: assuming the amount assigned to NCI is the proportionate
a. debited for P12,000 in the elimination entries share in the fair value of net assets.
b. credited for P12,000 in the elimination entries
c. debited for P4,000 in the elimination entries 7. What amount of inventory will be reported
d. credited for P4,000 in the elimination entries. a. P52,800 c. P74,600
b. P68,000 d. P 76,800
4. The consolidated net income for 2018 will be:
a. P122,400 c. P100,000 8. What is the amount of the non-controlling interest?
b. P114,400 d. P 94,240 a. P 40,000 c. P 52,267
b. P 42,200 d. P 120,000
On January 1, 2018, P Company purchased 80% of S
Company’s outstanding stock for P2,000,000, an RICH Corporation paid P1,125,000 for an 80% interest in
amount equal to the book value of interest acquired. HARD Corporation on January 1, 2018 at a price P37,500
Appraisal of S Company’s net assets revealed that land in excess of underlying book value. The excess was
is undervalued by P80,000 while Plant Assets with allocated P15,000 to undervalued equipment with a ten-
remaining life of 5 years is overvalued by P200,000. year remaining useful life and P22,500 to goodwill which
Substantial portion of S Company’s inventories came was not impaired during the year. During 2018, HARD
from P Company. Summary of inter-company Corporation paid dividend of P60,000 to RICH Corporation.
shipments are given below: The income statements of RICH and HARD for 2018 are
Jan. 1 Merchandise costing P420,000 are given below:
shipped at 25% gross profit based on
cost. RICH HARD
May 1 Merchandise costing P660,000 are Sales P2,500,000 P1,000,000
shipped at the same gross profit rate Cost of sales (1,250,000) (500,000)
used on Jan.1 Depreciation
Nov. 1 Merchandise costing P209,600 are expense (250,000) (150,000)
shipped at the same gross profit rate Other expense (500,000) (225,000)
used on Jan.1 of which 1/5 is on hand at Net income P500,000 P125,000
December 31, 2018.
9. Consolidated net income for 2018 is
5. The amount of inter-company sales to be eliminated a. P632,125 c. P623,125
a. P 1,289,600 c. P 2,257,500 b. P263,125 d. P632,215
b. P 1,612,500 d. P 1,612,000
10. Non-controlling interest in net assets at December 31,
P Corporation acquired 70% of the voting common 2018.
stock of S Company at a time when S Company’s book a. P290,785 c. P270,985
values and fair values were equal. Separate incomes b. P209,785 d. P290,875