On January 1, 20X1 LOL Corporation purchased 70 % interest in SAS Corporation for P120,000, when...

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On January 1, 20X1 LOL Corporation purchased 70 % interest in SAS Corporation for P120,000, when its capital stock and retained earnings were P60,000 and P40,000 respectively. The assets and liabilities of SAS Company were fairly valued except for the plant and equipment which has a book value of P100,000 and a market value of P120,000 (with a remaining life of 5 years) and the inventories which has a book value of P30,000 and a market value of P40.000. The account balances of the parent and subsidiary as at December 31, 20X1 are as follows: LOL CORP SAS CORP P180,000 Cash & Other CA Inventory Plant & Equip. (net) Investments in Stocks, S Co. Cost of Sales Operating Expenses Dividends Paid Liabilities Capital Stock, P100 par Retained Earnings Sales 390.000 120,000 Cash & Other CA Inventory Plant & Equip. (net) Investments in Stocks, S Co. Cost of Sales 110.000 45,000 Operating Expenses Dividends Paid Liabilities Capital Stock, P100 par Retained Earnings Sales 20,000 (71,600) (500,000) Dividends Revenue Total Assume Impairment of goodwill at 10% in 20X1. ( 65,000) (220,000) (8,400) P0 Assume further that the account balances of the parent and subsidiary as at December 31, 20X2 are as follows. LOL CORP P229.000 390,000 120,000 115,000 50,000 50,000 (63,200) (500,000) (118,400) (250,000) (22.400) 0 P 50,000 30,000 100.000 Dividends Revenuc Total P Assume impairment of goodwill for 20X2 is P800 80,000 25,000 12.000 ( 47,000) (60,000) (40,000) (150,000) P0 SAS CORP P 96,000 30,000 100,000 90,000 30,000 32,000 (60,000) (60,000) (73,000) (185,000) P 0 Requirements: (Use Partial Goodwill Approach) a. Working paper adjustments and eliminating entries for 20X1 and 20X2 b. Consolidated financial statement working paper at year-end for 20X1 and 20x2 On January 1, 20X1 LOL Corporation purchased 70 % interest in SAS Corporation for P120,000, when its capital stock and retained earnings were P60,000 and P40,000 respectively. The assets and liabilities of SAS Company were fairly valued except for the plant and equipment which has a book value of P100,000 and a market value of P120,000 (with a remaining life of 5 years) and the inventories which has a book value of P30,000 and a market value of P40.000. The account balances of the parent and subsidiary as at December 31, 20X1 are as follows: LOL CORP SAS CORP P180,000 Cash & Other CA Inventory Plant & Equip. (net) Investments in Stocks, S Co. Cost of Sales Operating Expenses Dividends Paid Liabilities Capital Stock, P100 par Retained Earnings Sales 390.000 120,000 Cash & Other CA Inventory Plant & Equip. (net) Investments in Stocks, S Co. Cost of Sales 110.000 45,000 Operating Expenses Dividends Paid Liabilities Capital Stock, P100 par Retained Earnings Sales 20,000 (71,600) (500,000) Dividends Revenue Total Assume Impairment of goodwill at 10% in 20X1. ( 65,000) (220,000) (8,400) P0 Assume further that the account balances of the parent and subsidiary as at December 31, 20X2 are as follows. LOL CORP P229.000 390,000 120,000 115,000 50,000 50,000 (63,200) (500,000) (118,400) (250,000) (22.400) 0 P 50,000 30,000 100.000 Dividends Revenuc Total P Assume impairment of goodwill for 20X2 is P800 80,000 25,000 12.000 ( 47,000) (60,000) (40,000) (150,000) P0 SAS CORP P 96,000 30,000 100,000 90,000 30,000 32,000 (60,000) (60,000) (73,000) (185,000) P 0 Requirements: (Use Partial Goodwill Approach) a. Working paper adjustments and eliminating entries for 20X1 and 20X2 b. Consolidated financial statement working paper at year-end for 20X1 and 20x2

Answer rating: 100% (QA)

Here are the stepbystep calculations for the consolidating adjustments and consolidated working papers for 20X1 and 20X2 20X1 Adjustments 1 Adjust pla... View the full answer