Reported net income of GG Company

P 45,000
Reported gain on sale of equipment
P15,000
Intercompany profit realized in 20x6
(5,000)
(10,000)
Realized net income of GG Company
P 35,000
Proportion of stock held by
non-controlling interest
x .40
Income assigned to non-controlling interests
P 14,000
40.
c
Operating income reported by TLK Corporation
P 85,000
Net income reported by GG Company
45,000
P130,000
Less: Unrealized gain on sale of equipment
(P15,000 - P5,000)
(10,000)
Consolidated net income
P120,000
41. b
Eliminating entries:
12/31/20x5: date of acquisition
Restoration of BV and eliminate unrealized gain
Equipment
10,000
Gain
150,000
Accumulated depreciation
160,000
Parent Books – Mortar Subsidiary Books – Granite
Cash
390,000
Equipment
390,000
Accumulated depreciation
160,000
Cash
390,000
Equipment
400,000
Gain
150,000
Mortar
Selling price
P390,000
Less: Book value, 12/31/20x5
Cost, 1/1/20x2
P400,000
Less: Accumulated depreciation : P400,000/10 years x 4 years
160,000
240,000
Unrealized gain on sale of equipment
P 150,000
Realized gain – depreciation: P150,000/6 years
P 25,000
42. a – refer to No. 41 for computation
43. b - refer to No. 41 for computation
44. d
Eliminating entries:
12/31/20x6: subsequent to date of acquisition
Realized Gain – depreciation
Accumulated depreciation
25,000
Depreciation expense
25,000
P150,000 / 6 years or P65,000 – P40,000
“Should be in CFS” Parent Books – Mortar “Recorded as” Subsidiary Books - Granite
Depreciation expense
(P400,000 / 10 years)
40,000
Depreciation expense
(P390,000 / 6 years)
65,000
Acc. Depreciation
40,000
Acc. depreciation
65,000
45. c
Eliminating entries:
12/31/20x6: subsequent to date of acquisition
Equipment
10,000
Retained earnings (150,000 – 25,000)
100,000
Accumulated depreciation (P160,000 – P25,000)
135,000
46. a
Total gain on the sale = P1,000,000 – (P500,000 - P150,000) = P650,000
Unconfirmed gain after three years = 2/5 x P650,000 = P260,000
47. d
Depreciation to 1/1/x3 is P25,000
Depreciation expense for 20x3 and 20x4 is (P85,000 - P25,000)/6 = P10,000 per year
Therefore accumulated depreciation at 12/31/x4 is P45,000.
Net equipment balance is P85,000 - P45,000 = P40,000.
48. b
At the end of two years, the subsidiary reports the equipment at original cost of P2,500,000 and
accumulated depreciation of (P2,500,000/10) x 2 = P500,000. Depreciation expense is
P250,000.
The consolidated balance sheet reports the equipment at original cost of P1,000,000 and
accumulated depreciation of P200,000 + ([(P1,000,000 - P200,000)/10] x 2) = P360,000.
Depreciation expense is P80,000.
Eliminating entries at the end of the second year are:
Accumulated depreciation
170,000
Investment in subsidiary
1,530,000
Equipment
1,700,000
Equipment
200,000
Accumulated depreciation
200,000
Accumulated depreciation
170,000
Depreciation expense
170,000
49. d
50. d
The subsidiary reports depreciation expense for the year at P500,000 (P2,500,000/5) and a gain
on the sale at P1,750,000 [P2,750,000 - ((P2,500,000 - (3)(P500,000))]. The consolidated
statements show depreciation expense for the year at P600,000 (P3,000,000/5) and a gain on
the sale at P1,550,000 [P2,750,000 - ((P3,000,000 - (3)(P600,000))]. Therefore the eliminating
entries increase depreciation expense by P100,000 and reduce the gain by P200,000, for a net
effect on consolidated income of: P300,000 decrease.
51. a
Consolidated Net Income for 20x9
P Company’s net income from own/separate operations………….
P 140,000
Realized gain on sale of equipment (downstream sales) through depreciation
___0
P Company’s realized net income from separate operations*…….…..
P 140,000
S Company’s net income from own operations………………………………….
P 30,000
Unrealized loss on sale of equipment (upstream sales)
20,000
Realized loss on sale of equipment (upstream sales) through depreciation –
none, since the date of sale is end of the year
( 0)
S Company’s realized net income from separate operations*…….…..
P 50,000
50,000
Total
P190,000
Less: Amortization of allocated excess……………………
0
Consolidated Net Income for 20x9
P190,000
Less: Non-controlling Interest in Net Income* *
15,000
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent – 20x9…………..
P175,000
*that has been realized in transactions with third parties.
Selling price
P180, Reported net income of GG Company
P 45,000
Reported gain on sale of equipment
P15,000
Intercompany profit realized in 20x6
(5,000)
(10,000)
Realized net income of GG Company
P 35,000
Proportion of stock held by
non-controlling interest
x .40
Income assigned to non-controlling interests
P 14,000
40.
c
Operating income reported by TLK Corporation
P 85,000
Net income reported by GG Company
45,000
P130,000
Less: Unrealized gain on sale of equipment
(P15,000 - P5,000)
(10,000)
Consolidated net income
P120,000
41. b
Eliminating entries:
12/31/20x5: date of acquisition
Restoration of BV and eliminate unrealized gain
Equipment
10,000
Gain
150,000
Accumulated depreciation
160,000
Parent Books – Mortar Subsidiary Books – Granite
Cash
390,000
Equipment
390,000
Accumulated depreciation
160,000
Cash
390,000
Equipment
400,000
Gain
150,000
Mortar
Selling price
P390,000
Less: Book value, 12/31/20x5
Cost, 1/1/20x2
P400,000
Less: Accumulated depreciation : P400,000/10 years x 4 years
160,000
240,000
Unrealized gain on sale of equipment
P 150,000
Realized gain – depreciation: P150,000/6 years
P 25,000
42. a – refer to No. 41 for computation
43. b - refer to No. 41 for computation
44. d
Eliminating entries:
12/31/20x6: subsequent to date of acquisition
Realized Gain – depreciation
Accumulated depreciation
25,000
Depreciation expense
25,000
P150,000 / 6 years or P65,000 – P40,000
“Should be in CFS” Parent Books – Mortar “Recorded as” Subsidiary Books - Granite
Depreciation expense
(P400,000 / 10 years)
40,000
Depreciation expense
(P390,000 / 6 years)
65,000
Acc. Depreciation
40,000
Acc. depreciation
65,000
45. c
Eliminating entries:
12/31/20x6: subsequent to date of acquisition
Equipment
10,000
Retained earnings (150,000 – 25,000)
100,000
Accumulated depreciation (P160,000 – P25,000)
135,000
46. a
Total gain on the sale = P1,000,000 – (P500,000 - P150,000) = P650,000
Unconfirmed gain after three years = 2/5 x P650,000 = P260,000
47. d
Depreciation to 1/1/x3 is P25,000
Depreciation expense for 20x3 and 20x4 is (P85,000 - P25,000)/6 = P10,000 per year
Therefore accumulated depreciation at 12/31/x4 is P45,000.
Net equipment balance is P85,000 - P45,000 = P40,000.
48. b
At the end of two years, the subsidiary reports the equipment at original cost of P2,500,000 and
accumulated depreciation of (P2,500,000/10) x 2 = P500,000. Depreciation expense is
P250,000.
The consolidated balance sheet reports the equipment at original cost of P1,000,000 and
accumulated depreciation of P200,000 + ([(P1,000,000 - P200,000)/10] x 2) = P360,000.
Depreciation expense is P80,000.
Eliminating entries at the end of the second year are:
Accumulated depreciation
170,000
Investment in subsidiary
1,530,000
Equipment
1,700,000
Equipment
200,000
Accumulated depreciation
200,000
Accumulated depreciation
170,000
Depreciation expense
170,000
49. d
50. d
The subsidiary reports depreciation expense for the year at P500,000 (P2,500,000/5) and a gain
on the sale at P1,750,000 [P2,750,000 - ((P2,500,000 - (3)(P500,000))]. The consolidated
statements show depreciation expense for the year at P600,000 (P3,000,000/5) and a gain on
the sale at P1,550,000 [P2,750,000 - ((P3,000,000 - (3)(P600,000))]. Therefore the eliminating
entries increase depreciation expense by P100,000 and reduce the gain by P200,000, for a net
effect on consolidated income of: P300,000 decrease.
51. a
Consolidated Net Income for 20x9
P Company’s net income from own/separate operations………….
P 140,000
Realized gain on sale of equipment (downstream sales) through depreciation
___0
P Company’s realized net income from separate operations*…….…..
P 140,000
S Company’s net income from own operations………………………………….
P 30,000
Unrealized loss on sale of equipment (upstream sales)
20,000
Realized loss on sale of equipment (upstream sales) through depreciation –
none, since the date of sale is end of the year
( 0)
S Company’s realized net income from separate operations*…….…..
P 50,000
50,000
Total
P190,000
Less: Amortization of allocated excess……………………
0
Consolidated Net Income for 20x9
P190,000
Less: Non-controlling Interest in Net Income* *
15,000
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent – 20x9…………..
P175,000
*that has been realized in transactions with third parties.
Selling price
P180,000
Less: Book value, 12/31/20x9
Cost, 1/1/20x4
P500,000
Less: Accumulated depreciation : P500,000/10 years000
Less: Book value, 12/31/20x9
Cost, 1/1/20x4
P500,000
Less: Accumulated depreciation : P500,000/10 years