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    Advance Financial Accounting Report

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    Joann Rivero-Salomon
    The document provides financial information for S Company including common stock, retained earnings balances for 2014, net income, and dividends declared. It states that P Company owns 80% of S common stock. In 2014, P Company purchased $4 million of merchandise from S Company at cost plus 25% of cost. As of December 31, 2014, P Company had $1.25 million of S Company's merchandise in inventory. The companies file a consolidated tax return.

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    Advance Financial Accounting Report

    Uploaded by

    Joann Rivero-Salomon
    14 views1 page
    The document provides financial information for S Company including common stock, retained earnings balances for 2014, net income, and dividends declared. It states that P Company owns 80% of S common stock. In 2014, P Company purchased $4 million of merchandise from S Company at cost plus 25% of cost. As of December 31, 2014, P Company had $1.25 million of S Company's merchandise in inventory. The companies file a consolidated tax return.

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    AFAR

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    The document provides financial information for S Company including common stock, retained earnings balances for 2014, net income, and dividends declared. It states that P Company owns 80% of S common stock. In 2014, P Company purchased $4 million of merchandise from S Company at cost plus 25% of cost. As of December 31, 2014, P Company had $1.25 million of S Company's merchandise in inventory. The companies file a consolidated tax return.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    14 views1 page

    Advance Financial Accounting Report

    Uploaded by

    Joann Rivero-Salomon
    The document provides financial information for S Company including common stock, retained earnings balances for 2014, net income, and dividends declared. It states that P Company owns 80% of S common stock. In 2014, P Company purchased $4 million of merchandise from S Company at cost plus 25% of cost. As of December 31, 2014, P Company had $1.25 million of S Company's merchandise in inventory. The companies file a consolidated tax return.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    DANIEL JACK TAJEL BSAIIIX

    Preparation for Advance Financial Accounting and Reporting 2

    The following balances were taken from the records of S Company:


    Common stock P2,500,000
    Retained earnings, 1/1/14 P1,450,000
    Net income for 2014 3,000,000
    Dividends declared in 2014 (1,550,000)
    Retained earnings, 12/31/14 2,900,000
    Total stockholders’ equity, 12/31/14 P5,400,000

    P Company owns 80% of the common stock of S Company. During 2014, P Company purchased
    merchandise from S Company for P4,000,000. S Company sells merchandise to P Company at cost plus
    25% of cost. On December 31, 2014, merchandise purchased from S Company for P1,250,000 remains in
    the inventory of P Company. On January 1, 2014, P Company’s inventory contained merchandise purchased
    from S Company for P525,000. The affiliated companies file a consolidated income tax return. There was
    no difference between the implied value and the book value of net assets acquired.

    Answer:

    P3,000,000 × .20 = P600,000 noncontrolling interest in consolidated income.

    [(.20 × P5,400,000) -.20(P1,250,000 – P1,250,000/1.25)] = P1,030,000 noncontrolling


    interest in consolidated net assets on December 31, 2014.

    Sales 4,000,000
    Cost of Goods Sold 4,000,000

    Cost of Goods Sold 250,000


    Ending Inventory (Balance Sheet) 250,000
    [P1,250,000 - (P1,250,000/1.25)]

    1/1 Retained Earnings – P Company (1) 84,000


    Noncontrolling interest (2) 21,000
    Cost of Goods Sold (Beginning Inventory) 105,000
    [P525,000 – (P525,000/1.25)] = P105,000

    (1) .8(P105,000)
    (2) .2(P105,000)

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