On January 1, 20x9, P Company purchased an 80% interest in S Company for P340,000. On this
Question:
On January 1, 20x9, P Company purchased an 80% interest in S Company for P340,000. On this date, S Company had Capital Stock of P150,000 and Retained Earnings of P100,000. An examination of S Company’s
assets and liabilities revealed that book values were equal to market values for all except the following:
Book value | Market value | |
Plant and equipment (net) | 300,000 | 400,000 |
Merchandise inventory | 80,000 | 100,000 |
The plant and equipment had an expected remaining life of 5 years, and the inventory should be sold in 20x9. P Company’s income was P250,000 in 20x9 and P290,000 in 20x0. S Company’s income was P120,000 in 20x9 and P 180,000 in 20x0. S Company paid cash dividends of P50,000 in 20x9 and P60,000 in 20x0.
P Company uses the cost method in accounting for its investment in stocks of S Company.
Requirements:
1. Calculate the investment income of P Company
from S Company in 20x9 and in 20x0.
2. Elimination entries for consolidated statement working papers on January 1, 20x9, December 31, 20x9 and December 31, 20x0.
3. Calculation of minority interest in net income of subsidiary for 20x9 and 20x0
4. Calculation of consolidated net income for 20x9 and 20x0.
5. Calculation of minority interest in net assets as of January 1, 20x9, December 31, 20x9 and December 31, 20x0.
Expert Answer:
The Answes for the question is as follows QNo1 Calculation of Investment Income of P Company Particulars 20x9 20x0 S Companys Income before Dividend 1... View the full answer
