On January 1, 2022, ABC Company purchased 70% of ordinary shares of XYZ Company at a...

 

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On January 1, 2022, ABC Company purchased 70% of ordinary shares of XYZ Company at a price of P3,000,000. On January 1, 2022, ABC reported retained earnings in the amount of P10,000,000. As of this said date, the total assets of XYZ Company are P6,500,000 while its total liabilities amounted to P1,000,000. All of the assets and liabilities of XYZ are properly valued except for a building with a remaining life of 10 years with carrying value of P1,500,000 and fair value of P1,000,000. On April 1, 2022, ABC sold inventories at a price of P200,000 to XYZ at a mark-up of 25% based on cost. On July 1, 2022, XYZ sold a machinery to ABC ata price of P880,000, when its book value is still P1,000,000 on this date. As of this date, the said machinery has remaining life of 3 years. As of December 31, 2022, XYZ has resold to its customers 40% of inventories coming from ABC. For the year ended December 31, 2022, the two companies reported the following information: 2022 Net Income 2022 Dividends Declared ⒸP14.139.000 OP14.131.000 OP14,061,000 ABC Company OP13.631.000 XYZ Company How much is the consolidated retained earnings in ABC's Consolidated Statement of Financial Position on December 31, 2022? P4,000,000 P2,000,000 P1,500,000 P500,000 On January 1, 2022, ABC Company purchased 70% of ordinary shares of XYZ Company at a price of P3,000,000. On January 1, 2022, ABC reported retained earnings in the amount of P10,000,000. As of this said date, the total assets of XYZ Company are P6,500,000 while its total liabilities amounted to P1,000,000. All of the assets and liabilities of XYZ are properly valued except for a building with a remaining life of 10 years with carrying value of P1,500,000 and fair value of P1,000,000. On April 1, 2022, ABC sold inventories at a price of P200,000 to XYZ at a mark-up of 25% based on cost. On July 1, 2022, XYZ sold a machinery to ABC ata price of P880,000, when its book value is still P1,000,000 on this date. As of this date, the said machinery has remaining life of 3 years. As of December 31, 2022, XYZ has resold to its customers 40% of inventories coming from ABC. For the year ended December 31, 2022, the two companies reported the following information: 2022 Net Income 2022 Dividends Declared ⒸP14.139.000 OP14.131.000 OP14,061,000 ABC Company OP13.631.000 XYZ Company How much is the consolidated retained earnings in ABC's Consolidated Statement of Financial Position on December 31, 2022? P4,000,000 P2,000,000 P1,500,000 P500,000

Answer rating: 100% (QA)

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