BaronFogAntelope239
On January 2 2017, Par company purchased 80% of the outstanding…
On January 2 2017, Par company purchased 80% of the outstanding shares of Sub by paying P340,000, the Sub’s common stock and retained earnings on this date amounted to P150,000 and P230,000 respectively. Also on this date, an equipment us undervalued by P20,000 with remaining life of 10 years.
On January 1 2019, Sub had P150,000 of capital stock and P300,000 of retained earnings. Also on the same date, Par company had P1,000,000 of capital stock and P700,000 (Cost method) and P750,000 (Equity method) of retained earnings.
During the year, Par company sold merchandise to Sub for P60,000 and in turn, purchased P40,000 from Sub Company. Inter-company sales of merchandise were made at the following gross profit rates:
Sales made by parent 25% based on cost
Sales made by subsidiary 20% based on sales
On december 31 2019, 30% of all intercompany sales remain in the ending inventory of the purchasing affiliate.
The beginning inventory of Par Company includes P2,500 worth of merchandise acquired from Sub Company on which Sub company reported a profit of P1,000. While beginning inventory of Sub includes P3,000 of merchandise acquired from Par company at 35% mark up.
The following selected results of operations were as follows:
Par Company Sub Company
Dividends Paid 60,000 10,000
Sales 1,100,000 900,000
Cost of Sales 880,00 720,000
Gross Profit 220,000 180,000
net income from own operations 100,000 30,000
Determine the following
1. Dividend Income under Cost method for 2019
a) 18,730 b) 10,000 c) 8,000 d) 8,200
2. Balance of investment as of december 31 2019 under cost method
a) 354,600 b) 351,960 c) 401,680 d) 340,000
3. equity in subsidiary income or net earnings account under equity method
a) 18,730 b) 10,000 c) 8,000 d) 8,200
4. The balance of investment as of dec 31 2019 under equity method assuming the investment balance on jan 1 2019 is 390,950
a) 354,600 b) 351,960 c) 401,680 d) 340,000
5. The nci in net income for 2019
a) 6,280 b) 6,120 c) 5,720 d) 5,320
6. Profit attributable to equity holders of parent in conso net income
a) 122,600 b) 118,730 c) 118,570 d) 118,330
7. Conso net income for 2019 124,050
a) 124,050 b) 122,600 c) 118,570 d) 118,330
8. SHE of subsidiary of subsidiary on dec 31 2019 470,000
a) 450,000 b) 470,000 c) 481,600 d) 484,000
9. NCI (In net assets) on dec 312019 using proportionate basis should be
a) 97,120 b) 96,920 c) 96,320 d) 73,520
10. NCI (In net assets) on dec 312019 using fair value basis
a) 101,320 b) 96,920 c. 96,320 d) 73,520
11. Parent’s portion of consolidated retained earnings on dec 2019
a) 700,000 b) 752,000 c) 753,600 d) 809,680
12. Conso retained earnings on dec 31 2019
a) 700,000 b) 752,000 c) 753,600 d) 809,680
13. Conso SHE using proportionate basis
a) 1,911,000 b) 1,906,000 c) 1,905,920 d) 1,740,000
14. Conso SHE using fair value basis
a) 1,911,000 b) 1,906,000 c) 1,905,920 d) 1,740,000
15. Conso sales for 2019
a) 2,000,000 b) 1,900,000 c) 1,960,000 d) 1,940,000
16. Conso COGS for 2019
a) 1,503,950 b) 1,598,600 c) 1,597,450 d) 1,596,050
here are the answ3rs. i just n3ed the soluti0ns
1) C. 8000
2.) D. 340000
3.) A. 18730
4.) C. 401680
5.) D. 5320
6.) B. 118730
7.) A. 124050
8.) B. 470000
9.) C. 96320
10.) A. 101320
11.) D. 809680
12.) D. 809680
13.) B. 1906000
14.) A. 1911000
15.) B. 1900000
16.) A. 1503950
