Question
On January 1, 2019, 80% of the outstanding stocks of Anak Company was purchased by Tatay Company for P2,880,000. At that time, the book value
On January 1, 2019, 80% of the outstanding stocks of Anak Company was purchased by Tatay Company for P2,880,000. At that time, the book value of Anak Company’s net assets equaled to P2,800,000. The excess is attributable to equipment with a 8-year life.
The following trial balances of Tatay Company and Anak Company were prepared on December 31, 2019:
| Tatay Company | Anak Company | ||
| Debit | Credit | Debit | Credit |
Cash | P 810,000 |
| P 170,000 |
|
Accounts Receivable | 425,000 |
| 445,000 |
|
Inventory | 600,000 |
| 275,000 |
|
Property, Plant, and Equipment, net | 4,300,000 |
| 2,200,000 |
|
Investment in Anak Company | 2,880,000 |
| - |
|
Accounts Payable |
| P 57,000 |
| P 100,000 |
Common Stock, P10 par |
| 1,000,000 |
| 400,000 |
Additional Paid-in Capital |
| 1,500,000 |
| 200,000 |
Retained Earnings |
| 5,500,000 |
| 2,200,000 |
Dividends Declared |
|
| 210,000 |
|
Sales |
| 12,000,000 |
| 1,200,000 |
Cost of Goods Sold | 7,000,000 |
| 750,000 |
|
Operating expenses | 4,210,000 |
| 50,000 |
|
Dividend Income |
| 168,000 |
|
|
Total | P 20,225,000 | P 20,225,000 | P4,100,000 | P4,100,000 |
Throughout 2019, sales to Tatay Corporation made up 40% of Anak Company’s revenue and produced a 30% gross profit. At year-end, Tatay Corporation had sold P300,000 of the goods purchased from Anak Company. None of Anak Company goods were in Tatay Corporation’s January 1, 2019 beginning inventory.
On the other hand, the inventory held by Anak Company on January 1, 2019 contained merchandise purchased from Tatay Company for P100,000 at a mark-up of 25% above cost. All of these were sold by Anak Company for 2019. Anak Company also purchased P500,000 worth of merchandise from Tatay Company with the same profit percentage, 20% of which still remained in its December 31, 2019 Inventory.
Cost Method of Accounting is used to account for Tatay’s investment and goodwill is computed using total goodwill approach.
Question 16. How much is the Consolidated Assets presented on 2019 Balance Sheet?
Question 17. How much is the Consolidated Retained Earnings in 2019?
Question 18. What amount is the NCI’s share in the Consolidated Net Income?
Question 19. How much is the Consolidated Cost of Goods Sold presented by the group?
Question 20. What is the amount of NCI in the consolidated financial statements?
Step by Step Solution
3.43 Rating (150 Votes )
There are 3 Steps involved in it
Step: 1
Step 1 Calculate the excess purchase price and allocate it to equipment with an 8year life Excess Purchase Price Purchase Price Book Value of Net Assets Excess Purchase Price P2880000 P2800000 Excess ...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started