Business Combination 4

CONSOLIDATED FINANCIAL STATEMENTS – SUBSEQUENT TO DATE OF ACQUISITION
01. Procter Corporation acquired on January 1, 2021 75% of the outstanding ordinary shares of Rambler
Company for P207,000. On that date, Rambler’s statement of financial position showed
shareholders’ equity of:
Ordinary shares, par P100 P200,000
Retained earnings 50,000
The excess between the price paid and the book value of subsidiary’s net assets is allocated to
equipment which has an estimated remaining useful life of then years. For the year ended December
31, 2021, Rambler reported net profit of P60,000 and paid cash dividends of P20 per share of its
ordinary share. What is the balance the NCI on December 31, 2021?
a. P45,000 b. P73,350 c. P42,500 d. P45,500
02. Power Corporation purchased a 70% interest in Star Company on January 1, 2021, for P140,000,
when Star’s shareholders’ equity consisted of P30,000 ordinary shares, P100,000 share premium, and
P20,000 retained earnings. Profit and dividend data for Star are as follows:
Net profit P50,000
Dividend 5,000
NCI is measured at fair value. If Power reported profit separate from own operations of P120,000 for
2021, what is the consolidated total comprehensive income for 2021?
a. P113,870 b. P170,000 c. P115,370 d. P116,500
03. Prime Company acquired 75% in Surety Corporation which is recorded on a cost basis. For the year
ended December 31, 2021, the following data were taken from their respective books:
Net profit of Prime Company P250,000
Net profit of Surety Corporation 90,000
Dividends paid by Surety Corporation 18,000
What is the consolidated comprehensive income attributable to parent on December 31, 2016?
a. P295,450 b. P304,000 c. P317,950 d. P326,500
04. On January 1, 2021, Padres Company purchased an 80% investment in Sisters Company. The price
paid was equal to Padres’ interest in the net assets at that date. On January 1, 2021, Padres and
Sisters had retained earnings of P1,000,000 and P200,000 respectively. The following data were
disclosed in 2021 as follows:
a) Consolidated comprehensive income is P400,000 including NCI’s share in net profit.
b) Padres declared dividends of P100,000.
c) Sisters had net profit of P80,000 and declared dividends of P40,000.
d) There were no other intercompany transactions
On December 31, 2021, what is the consolidated retained earnings?

a. P1,300,000 b. P1,284,000 c. P1,532,000 d. P1,540,000
05. On January 1, 2021, Phil, Inc. issued 400,000 additional shares of P10 par value ordinary shares for
all of Sony Company’s ordinary shares. Immediately before this business combination, Phil’s
shareholders’ equity was P16,000,000 and Sony’s shareholders’ equity was P8,000,000.
On January 1, 2021, the fair value of Phil’s share was P20 per share, and the fair value of Sony’s net
assets was P8,000,000 Data from separate company’s operations follows:
Phil Sony
Net profit P2,500,000 P600,000
Dividends paid 900,000 -
What is the consolidated shareholders’ equity at December 31, 2021?

a. P19,320,000 b. P17,600,000 . P26,200,000 d. P18,200,000
06. On June 30, 2021, Press, Inc., purchased 70% of the ordinary shares of Shoreland
Company for P700,000. At that date, Shoreland had P650,000 of ordinary share outstanding
and retained earnings of P250,000. All of the purchase difference was related to a building
with a book value of P175,000 and a remaining life of 10 years. Press’ retained earnings
balance at December 31, 2020, was P550,000. The income and dividend figures for both
Press and Shoreland for 2021 are as follows:
Income Dividends
Press P275,000 P70,000
Shoreland: Jan. 1 – June 30 80,000 30,000
Jul. 1 – Dec. 31 100,000 0
The income figure given for Press excludes any dividend income from Shoreland. On
December 31, 2021, the consolidated retained earnings is:
a. P821,500 b. P822,550 c. P821,500 d. P576,000
07. Using the same data in no. 6, the balance of non-controlling interest (NCI) is
a. P328,500 b. P319,000 c. P300,000 d. P319,950
08. Pablo Corporation holds 70% of Sito Company, and uses the cost method in
accounting for its investment. During 2021, Sito Company reported net income of
P70,000 and paid dividends of P40,000. Pablo reported net income (including dividend
income) of P130,000 and paid dividends of P50,000. There was no purchase difference at
the time of investment. What amount of consolidated net income attributable to parent
will be reported for 2021?
a. P172,000 b. P151,000 c. P102,000 d. P70,000
09. On January 2, 2021, Polo Corporation purchase 80% of Seed Company’s common
stock for P216,000. P10,000 of the excess is attributable to goodwill and the balance to a
depreciable asset with an economic life of ten years. On the date of acquisition Seed
reported common stock outstanding of P80,000 and retained earnings of P140,000, and
Polo reported common stock outstanding of P350,000 and retained earnings of P520,000.
On December 31, 2021, Seed reported net income of P35,000 and paid dividends of
P15,000, Polo reported earnings from its separate operations of P95,000 and paid
dividends of P46,000.
How much is the share of NCI in the comprehensive income of Seed Company ?
a. P7,000 b. P6,200 c. P6,000 d. P4,000
10. Using the same data in no. 9, what is the balance of NCI on December 31, 2021?
a) P54,750 b. P57,200 c. P55,600 d. P48,500

Business Combination 4

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CONSOLIDATED FINANCIAL STATEMENTS – SUBSEQUENT TO DATE OF ACQUISITION

On December 31, 2021, what is the consolidated retained earnings?

What is the consolidated shareholders’ equity at December 31, 2021?

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