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    Intersale Answer

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    JJ Jaum
    B1 Co purchased 80% interest in B2 Co on January 1, 2020 for P150,000. There were various intercompany transactions and adjustments made throughout 2020. On December 31, 2020, the consolidated financial statements were prepared which showed consolidated sales of P381,000, cost of sales of P209,750, and net income of P74,250. Negative goodwill of P5,200 arose from the acquisition.

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    Intersale Answer

    Uploaded by

    JJ Jaum
    62 views2 pages
    B1 Co purchased 80% interest in B2 Co on January 1, 2020 for P150,000. There were various intercompany transactions and adjustments made throughout 2020. On December 31, 2020, the consolidated financial statements were prepared which showed consolidated sales of P381,000, cost of sales of P209,750, and net income of P74,250. Negative goodwill of P5,200 arose from the acquisition.

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    B1 Co purchased 80% interest in B2 Co on January 1, 2020 for P150,000. There were various intercompany transactions and adjustments made throughout 2020. On December 31, 2020, the consolidated financial statements were prepared which showed consolidated sales of P381,000, cost of sales of P209,750, and net income of P74,250. Negative goodwill of P5,200 arose from the acquisition.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    62 views2 pages

    Intersale Answer

    Uploaded by

    JJ Jaum
    B1 Co purchased 80% interest in B2 Co on January 1, 2020 for P150,000. There were various intercompany transactions and adjustments made throughout 2020. On December 31, 2020, the consolidated financial statements were prepared which showed consolidated sales of P381,000, cost of sales of P209,750, and net income of P74,250. Negative goodwill of P5,200 arose from the acquisition.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    On Jan. 1, 2020, B1 Co. purchase 80% interest of B2 Co. for P150,000.

    Information on Simon’s financial position on this date follows:


     The identifiable assets and liabilities approximated their fair values except for inventories with carrying amount of P40,000 and fair
    value of P43,000 and building with carrying amount of P90,000 and fair value of P96,000. The building has a remaining useful life of 3
    years.
     B2’s equity comprises only share capital and retained earnings with carrying amounts of P150,000 and P35,000, respectively.
     NCI is measured at proportionate share.
    All of the inventories on Jan. 1, 2020 were sold during 2020.
    The following intercompany transactions occurred in 2020:
    a. B2 Co. sold goods costing P10,000 to B1 Co. for P19,000. B1 Co. held 3/4 of these goods in its ending inventory.
    b. B1 Co. sold goods to B2 Co. for P20,000. The gross profit rate is 20% based on sales price. B2 Co. sold 1/2 to unrelated parties during the
    year.
    The individual FS of the entities on Dec. 31, 2020 are shown below.
    Statement of financial position
    B1__ B2
    Cash P 143,000 P 60,000
    Inventory 440,000 160,000
    Investment in subsidiary (at cost) 160,000
    Building 700,000 81,000
    Total Assets P1,443,00 P301,000
    Accounts Payable P 200,000 P91,000
    Share capital 1,000,000 150,000
    Retained Earnings 243,000 60,000
    Total Liabilities and Equities P1,443,000 P301,000
    Income Statement
    B1 B2
    Sales P300,000 P120,000
    Cost of sales 165,000 72,000
    Gross profit 135,000 48,000
    Operating expenses 32,000 13,000
    Depreciation expense 40,000 10,000
    Net income 63,000 25,000
    Compute the ff. as of December 31, 2020 –
    a. Consolidated Sales
    Sales – B1 P300,000
    Sales - B2 120,000
    Less: intercompany sales(19,000+20,000) (39,000)
    Consolidated sales P381,000

    b. Consolidated Cost of sales


    Cost of sales – B1 P165,000
    Cost of sales – B2 72,000
    Add: (Deduct) intercompany sales (39,000)
    Unrealized profit in EI(6,750+2,000) 8,750
    Depreciation of FVA on inventory 3,000
    Consolidated Cost of sales P209,750

    c. Consolidated Inventory

    Ending inventory – B1 P440,000


    Ending inventory – B2 160,000
    Add: (Deduct) Unrealized profit in EI (8,750)
    Consolidated Ending InventoryP591,250

    d. Share of NCI on the Net Income of the Subsidiary


    Net income - B2 P25,000
    Add: (Deduct)
    Depreciation of FVA (3,000+2,000) (5,000)
    Unrealized profit in EI (6,750) EI per B2(19,000x75%) 14,250
    Adjusted Net income P13,250 EI @ cost (10,000 x75%) 7,500
    Multiply 20% Unrealized profit 6,750
    Share of NCI-NI of the Subsidiary P2,650
    e. NCI on the NA of the Subsidiary
    Net assets at BV – 12/31/2020 (150,000+60,000) P210,000 Net Assets – FV 1/1/2020 P194,000
    Add: (Deduct) Add: (Deduct)
    FV adjustments (6,000+3,000) 9,000 Depreciation on FVA (5,000)
    Depreciation on FVA (5,000) Unrealized profit on EI (6,750)
    Unrealized profit in EI – upstream (6,750) Net income – B2 25,000
    Net Assets 12/31/2020 – B2 at FV P207,250 Total Net Assets – FV 12/31/2020 P207,250
    Multiply by 20% Multiply by 20%
    NCI on Net Assets of Subsidiary P41,450 NCI on Net Assets of Subsidiary P41,450

    f. CNI
    Profits before adjustments P88,000
    Add: (Deduct) Unrealized Profit (8,750)
    Depreciation on FVA (2,000+3,000) (5,000)
    Consolidated Net Income P74,250

    g. CRE
    RE 12/31/2021 – B1 P243,000 RE, beg. – B1 P180,000
    Add: (Deduct) Add: Consolidated Net Income:
    Unrealized profit on EI – downstream (2,000) Adjusted Net Income – (63,000-2,000) P61,000
    Parents share in the NI of subsidiary: Add: Share of B1 on NI of B2:
    Adjusted Net Income – B2 P13,250 Adjusted NI – B2 P13,250
    Multiply by 80% 10,600 Multiply by 80% 10,600 71,600
    Negative goodwill 5,200 Negative Goodwill 5,200
    Consolidated Retained Earnings 12/31/20 P256,800 Consolidated Retained Earnings 12/31/20 P256,800

    h. Consolidated Financial Statements (SFP & IS)

    Statement of financial position


    B1__ B Consolidated
    Cash P 143,000 P 60,000 P 203,000
    Inventory 440,000 160,000 591,250
    Investment in subsidiary (at cost) 150,000 -
    Building 710,000 81,000 795,000 (6,000-2,000)
    Total Assets P1,443,00 P301,000 1,589,250
    Accounts Payable P 200,000 P91,000 P 291,000
    Share capital 1,000,000 150,000 1,000,000
    Retained Earnings 243,000 60,000 256,800
    NCI – Net Assets - - 41,450
    Total Liabilities and Equities P1,443,000 P301,000 1,589,250

    Consideration given P150,000


    NCI – proportionate value(194,000 x20%) 38,800
    Total 188,800
    FV – NA of subsidiary 194,000
    Negative Goodwill (P5,200)

    Consolidated Income Statement

    Sales P381,000
    Less: Cost of sales 209,750
    Gross Profit P171,250
    Less: Operating Expenses P45,000
    Depreciation expense 52,000 97,000
    Consolidated Net Income P 74,250

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