Goodwill: Multiple Choices - Computational

Price paid P 450,000
Non-controlling interest (P450,000/90%) x 10% 50,000

Total 500,000
Less fair value of net assets acquired (P360,000 – P40,000) 320,000
Goodwill P 180,000
15-3: c
15-1: d
Price paid P4,000,000

Less fair value of net assets acquired (P6,100 – P2,800) 3,300,000
Goodwill P 700,000
15-2: a

Total 500,000
Goodwill P 180,000
15-3: c
Plant assets – Pall Company (at book value) P 220,000

Plant assets – Mall Company (at fair value) 180,000
CHAPTER 15
MULTIPLE CHOICES - COMPUTATIONAL
15-1: d

Goodwill P 700,000

Total 500,000
Goodwill P 180,000
15-3: c
68
15-1: d

Goodwill P 700,000
15-2: a

Total 500,000
Goodwill P 180,000
15-3: c

CHAPTER 15
15-1: d

Goodwill P 700,000

Total 500,000
Goodwill P 180,000
15-3: c
15-1: d

Goodwill P 700,000
15-2: a

69
Total 500,000
Goodwill P 180,000
15-3: c

CHAPTER 15
15-1: d

Goodwill P 700,000
Total 373,000
Less net assets at fair value excluding goodwill:
Net assets at book value P290,700
Inventories 6,630
Plant and equipment 48,450
Patent 7,650 353,430
Goodwill P 19,570
* P43,605/P290,700 = 15%
15-12: a
Goodwill P250,000
FV of net assets acquired excluding goodwill (P700,000 – P150,000) 550,000
NCI (100,000)
Price paid by the Pepsi Company P700,000
15-13: b
Price paid (P247,095 + P69,955) P317,050

NCI [(P317,050/85%) x 15%*) 55,950
Total 373,000
Inventories 6,630
Patent 7,650 353,430
Goodwill P 19,570
70
* P43,605/P290,700 = 15%
CHAPTER 13
Billed Price % Cost Overvaluation

Beginning inventory from HO P15,000 150% P10,000
P 5,000
Shipments 110,000 150% 73,333
36,667
Balance before adjustment
41.667
Ending inventory from HO 5,000 150% 3,333
1,667
Required adjustments P40,000
13-5: c
Shipment to branch, at billed price (P375,000 x 120%) P450,000

Shipping cost 2,000
Total cost 452,000
Sold (50%) 226,000
Branch Inventory – Billed price P226,000
13-6: b
Total 373,000
Inventories 6,630
Patent 7,650 353,430
Goodwill P 19,570
* P43,605/P290,700 = 15%
15-12: a
Goodwill P250,000
FV of net assets acquired excluding goodwill (P700,000 – P150,000) 550,000
NCI (100,000)
Price paid by the Pepsi Company P700,000
15-13: b
Price paid (P247,095 + P69,955) P317,050

NCI [(P317,050/85%) x 15%*) 55,950
Total 373,000
71
Patent 7,650 353,430

Goodwill P 19,570
* P43,605/P290,700 = 15%
CHAPTER 13
Billed Price % Cost Overvaluation

Beginning inventory from HO P15,000 150% P10,000
P 5,000
Shipments 110,000 150% 73,333
36,667
Balance before adjustment
41.667
Ending inventory from HO 5,000 150% 3,333
1,667
Required adjustments P40,000
13-5: c
Shipment to branch, at billed price (P375,000 x 120%) P450,000

Shipping cost 2,000
Total cost 452,000
Sold (50%) 226,000
Branch Inventory – Billed price P226,000
13-6: b

Less: Fair value of net assets acquired
Current assets P1,100,000
Plant assets 2,200,000
Liabilities ( 300,000) 3,000,000
Income from acquisition P( 450,000)
APIC: [(P2,550,000 – P1,200,000) - P35,000*] P1,315,000

*Costs of SEC registration P12,000
Cost of issuing stock certificates 3,000
Documentary stamp tax 20,000
Total P35,000
14-6: a (at fair value at date of acquisition)
72
14-7: d
Abel net income, January to December (P80,000 + P1,320,000) P1,400,000

Cain net income, April to December 400,000
Total net income P1,800,000
14-8: a

Cash P 160,000
Inventory 380,000
Property, plant and equipment 1,120,000
Liabilities ( 360,000) 1,300,000
Income from acquisition P (500,000)
14.9 a
( 360,000) 1,300,000
14.10 a

Less: Fair value of net assets acquired (P600,000 – P188,000) 412,000
Goodwill P 288,000
Avon’s assets 2,000,000
Bell’s assets at fair value 600,000
Total assets P2,888,000
14-10: c
Debit to expenses:
Broker’s fee P 50,000
Pre-acquisition audit fee 40,000
General administrative costs 15,000
Legal fees for business combination 32,000
Other acquisition costs 6,000
Total P 143,000
Debit to APIC
Audit fee for SEC registration of stock issue P 46,000
SEC registration fee for stock issue 5,000
Total P 51,000

73
Liabilities ( 300,000) 3,000,000
APIC: [(P2,550,000 – P1,200,000) - P35,000*] P1,315,000

Total P35,000
14-7: d

14-8: a

Cash P 160,000
Inventory 380,000
Liabilities ( 360,000) 1,300,000
14.11 a

Goodwill P 288,000
14-10: c
Debit to expenses:
Total P 143,000
Debit to APIC
74
Total P 51,000

Liabilities ( 300,000) 3,000,000
APIC: [(P2,550,000 – P1,200,000) - P35,000*] P1,315,000

Total P35,000
14-7: d

14-8: a

Cash P 160,000
Inventory 380,000
Liabilities ( 360,000) 1,300,000
14.12 a

Goodwill P 288,000
14-10: c
Debit to expenses:
75
Total P 143,000
Debit to APIC
Total P 51,000
CHAPTER 16
P512,400
Pop’s share of Son’s CI (100%) 150,000 180,000 200,000
Dividends received (100%) ( 60,000) (60,000) ( 60,000)
Amortization of allocated excess to
Equipment (P38,000 / 10) ( 3,800) ( 3,800) ( 3,800)
Investment in Son, Dec. 31 P396,200 P512,400
P648,600
16-9: a
Sy’s CI P300,000
Amortization of allocated excess ( 60,000)
Adjusted CI of Sy P240,000
NCI in CI of subsidiary (P240,000 x 10%) P 24,000
16-10: a. Under the equity method consolidated retained earnings is equal to the retained
earnings of the parent company.
16-11: c
Retained earnings, Jan. 2, 2013 – Puzon P500,000

Consolidated CI attributable to parent:
CI – Puzon P200,000
CI – Suarez 40,000
Dividend income (P20,000 x 80%) (16,000)
NCI in Suarez CI (P40,000 x 20%) ( 8,000) 216,000
Dividends paid – Puzon ( 50,000)

Consolidated retained earnings, Dec. 31, 2013 P666,000
16-12: c
Price price P1,700,000

Less book value of interest acquired: 1,260,000
Excess P 440,000
76
Allocation due to undervaluation of net assets ( 40,000)
Goodwill P 400,000
16-13: d
NCI, January 2, 2013 [(P975,000/80%) x 20%] P243,750

NCI in subsidiary dividends (P125,000 x20%) (25,000)
NCI in adjusted CI of subisidiary (P190,000 – P10,000) x 20% 36,000
NCI, December 32, 2013 P182,750
16-14: b
Presto’s CI from own operations P140,000

Stork’s CI – March to December (P80,000 – P23,000) 57,000
NCI share in Stork’s CI (P57,000 x 10%) ( 5,700)
Consolidated CI attributable to parent P191,300
16-15: b
Investment in Siso Company (at date of acquisition) P600,000
Dividend income (P30,000 x 5%) P 1,500
16-16 d
Consolidated CI:
Pepe’s CI from own operations P210,000
Sison’s adjusted CI:
CI -2013 P67,000
Amortization of allocated excess
to equipment (P20,000 / 5) 4,000 63,000
Consolidated CI P273,000
Consolidated retained earnings:

Pepe’s retained earnings, Jan.2, 2012 P701,000
Consolidated CI attributable to parent– 2012
Pepe’s CI from own operations P185,000
Sison’s adjusted CI;
CI – 2012 P40,000
Amortization -2012 4,000 36,000
NCI in Sison’s CI (P36,000 x 30%) (10,800) 210,200
Dividends paid ,2012 - Pepe ( 50,000)
Pepe’s retained earnings, Jan. 2, 2013 P861,200
Consolidated CI attributable to parent– 2013:
Consolidated CI (see above) P273,000
NCI in Sison’s CI (P63,000 x 30%) ( 18,900) 254,100
Dividends paid, 2013 – Pepe ( 60,000)
77
Consolidated retained earnings, Dec. 31, 2013 P1,055,300
16-17: a

NCI, June 30, 2013 [(P700,000/70%) x 30%} 300,000
Total 1,000,000
Less book value of Susy’s net assets (P650,000 + P250,000) 900,000
Excess, allocated to building P 100,000
Amortization (P100,000 / 10) x 2/12 5,000
16-17, continued:
Consolidated retained earnings
Retained earnings, Jan. 1, 2013 – Pepe P550,000
CI – Precy P275,000
Adjusted CI of Susy:
CI of Susy P100,000
Amortization (P100,000 / 10) ÷ 2 ( 5,000) 95,000
NCI in Susy’s CI (P95,000 x 30%) (28,500) 341,500
Dividends paid – Precy ( 70,000)
Non-controlling interest
NCI, June 30, 2013 P300,000
NCI in Susy’s dividends, July 1 to December 31 -0-
NCI in Susy’s CI (P100,000 – P5,000) x 30% 28,500
NCI, December 31, 2013 P328,500
16-18: a
Goodwill
Less: Book value of interest acquired (P1,320,000 – P320,000) 1,000,000
Goodwill (not impaired) P 200,000
Consolidated retained earnings under the equity method is equal to the retained
earnings of the parent company, P1,240,000.
16-19: b
CI – Pablo P130,000
Sito’s CI 70,000
NCI in Sito’s CI (P70,000 x 30%) (21,000)
Consolidated CI attributable to parent P151,000
78
16-20: c
Consolidated net income – 2013

CI – Ponce P 90,000
Solis’ CI 40,000
NCIin Solis’ CI (P40,000 x 40%) (16,000)
Consolidated CI attributable to parent – 2013 P105,000
16-20, continued:
Consolidated retained earnings – 2013
Retained earnings, Jan. 2, 2012- Ponce P 400,000
Consolidated CI attributable to parent– 2012
CI – Ponce P70,000
Solis’ CI 35,000
NCI in Solis’s CI (P35,000 x 40%) ( 14,000) 75,000
Dividends paid, 2012– Ponce (25,000)
Consolidated CI attributable to parent– 2013 105,000
Dividends paid. 2013 – Ponce (30,000)
16.21 b
Price paid, January 2, 2013 P216,000

NCI, January 2, 2013 {(P216,000/80%) x 20%] 54.000
Total 270,000
Less book value of Seed’s net assets (P80,000 + P140,000) 220,000
Excess 50,000
Allocated to:
Depreciable assets (40,000)
Goodwill 10,000
Consolidated CI, December 31, 2013:

Polo CI from own corporation P 95,000
Seed CI from own operation:
CI 35,000
Amortization (40,000 ÷ 10%) (4,000)
GW impairment lost (8,000) 23,000
Total P118.000
16-22: c
Retained earnings 1/1/013 – Polo P520,000
79
Consolidated CI attributed to parent:
Consolidated CI 118,000
NCI in Seed’s adjusted CI (23,000x 20%) (4,600) 113,400
Total 633,400
Dividends paid- Polo (46,000)
Consolidated retained earnings 12/31/013 P587,400
16-23: b, P4,600 (see 16-22)
16-24: c
NCI, January 2, 2013 P 54,000

NCI ins Seed’s dividends (P15,000 x 20%) (3,000)
NCI in Seed’s CI 4,600
NCI, December 31, 2013 P 55,600
16-25: c (see no. 16-22)
16-26: a
Price paid, January 1, 2012 P231,000

NCI, January 1, 2012 [(P231,000/70%) x 30%] 99,000
Total 330,000
Less book value of Sisa’s net assets 280,000
Excess 50,000
Allocated to depreciable assets (10 years remaining life) (50,000)
Retained earnings, 1/1/13-Sisa company P230,000

Retained earnings, 1/1/12-Sisa company (squeeze) 155,000
Increase 75,000
Amortization- prior years (50,000 ÷ 10 years) (5,000)
Adjusted increase in earnings of Sisa (21,000/30% ) P70,000
16-27: a
Retained earnings 1/1/13- Pepe P520,000
Retained earnings 1/1/13- Sisa 230,000
Adjustment and elimination:
Date of acquisition (155,000)
Undistributed earnings to NCI (21,000)
Amortization- prior year (5,000) 49,000
16-28: a
Pepe company CI, 2013 P120,000
Sisa company CI, 2013 25,000
80
Dividend income (10,000 x 70%), 2013 (7,000)
Amortization- 2013 (5,000)
16-29: a
Consolidated retained earnings 1/1/13(see 16 – 27) P569,000
Consolidated CI (see 16-28) 133,000
NCI in Sisa CI (25,000 – 5,000) 30% (6,000) 127,000
Dividend paid- Pepe company ( 50,000)
16-30: a
Cash Proceeds P3,000,000

Fair value of retained NCI (40%) 1,750,000
Carrying amount of NCI before deconsolidation 500,000
Total 5,250,000
Less carrying value of Simon Company net assets 5,000,000
Gain on sale to profit or loss P 250,000
16-31: c
The gain is computed as follows:

Cash proceeds P280,000
Carrying value of interest sold (P2,400,000 x 10%) 240,000
Gain to APIC P 40,000
Since the APIC is only P30,000 on the date of sale, the remaining P10,000 is to be
credited to retained earnings account.
81
PROBLEMS
Problem 16-1
1. Determination and Allocation of Excess Schedule:
Implied Parent Price NCI Value

Fair Value (80%) (20%)
Fair value of subsidiary P 312,500 P 250,000 P 62,500

Less book value of interest acquired
Capital stock P 100,000
Retained earnings 150,000
Total equity P 250,000 P 250,000 P 250,000
Interest acquired 80% 20%
Book value P200,000 P 50,000
Excess P 62,500 P 50,000 P 12,500
Allocation to:
Fixed assets 62,500
2. Working Paper Elimination Entries:
a. Eliminate dividends declared by the subsidiary against dividend income and NCI:
Dividend income 4,000

NCI 1,000
Dividends declared – Sulu 5,000
b. Eliminate equity accounts of the subsidiary against the investment account and
the NCI account.
Common stock – Sulu 100,000

Retained earnings – Sulu 150,000
Investment in Sulu Company 200,000
NCI 50,000
c Allocate excess to fixed assets:
82
Fixed assets 62,500
Investment in Sulu Company 50,000
NCI 12,500
d. Amortized fixed assets (P62,500 / 10)

Expenses 6,250
Fixed assets 6,250
e. Recognize NCI in subsidiary net income:

NCI in subsidiary CI 3,750
NCI 3,750
Probem 16-1 concluded
3. Pedro Company
Consolidated Statement of CI
Year Ended December 31, 2013
Sales P250,000
Expenses 191,250
Consolidated CI P 58,750
Attributable to NCI 3,750
Attributable to controlling interest P 55,000
4. Pedro Company
Statement of Retained Earnings
Retained earnings, January 1 – Pedro Company P200,000

Consolidated CI attributable to controlling interest 55,000
Retained earnings, December 31, 2011 P255,000
5. Pedro Company
Consolidated Statement of Financial Position
December 31, 2013
Assets
Current assets P190,000
Non-current assets
Fixed assets (P662,500 – P132,250) 530,250
Total assets P720,250
Liabilities and Stockholders’ Equity

Current liabilities P100,000
Stockholders’ Equity:
83
Controlling interest:
Common stock P300,000
Total P555,000
Non-controlling interest (P62,500 – P1,000 + P3,750) 65,250 620,250
Total liabilities and equity P720,250
Problem 16-2
1. Eliminations and adjustments:
a to c are the same as in Problem 16-1:
d. Depreciate the fixed asset for the current year and one prior year:
Retained earnings, Jan. 1 – Sulu (prior year) 6,250

Expenses (current year) 6,250
Fixed assets 12,500
e. Recognize NCI in subsidiary CI:
NCI in subsidiary CI 1,750

NCI 1,750
e. Assign to the NCI their share of the increase in the subsidiary’s

Adjusted undistributed earnings of prior year:
Retained earnings, January 1- Sulu 2,750

NCI 2,750
Retained earnings, January 1, 2013 P170,000
Retained earnings, January 2, 2012 150,000
Increase in undistributed earnings P 20,000
Amortization in prior years 6,250
Adjusted undistributed earnings P 13,750
NCI % 20%
NCI P 2,750
2. Pedro Company
84
Sales P300,000
Expenses (P245,000 + P6,250) 251,250
Attributable to NCI 1,750
Attributable to controlling interest P 47,000
Problem 16-3
Amortization Schedule
Annual
Accounts Adjustments Life Amount 2010 2011 2012 2013
Inventory 1 P 6,250 P 6,250
Amortization:
Investments 3 5,000 5,000 5,000 5,000 5,000
Buildings 20 12,500 12,500 12,500 12,500 12,500
Equipment 5 34,500 34,500 34,500 34,500 34,500
Patent 10 2,250 2,250 2,250 2,250 2,250
Trademark 10 2,000 2,000 2,000 2,000 2,000
Discount on bonds payable 5 2,500 2,500 2,500 2,500 2,500
Total P 65,000 P 65,000 P 58,750 P 58,750 P58,750
Problem 16-4
Allocation Schedule
Price paid P206,000
Less: Book value of interest acquired 140,000
Excess P 66,000
Allocation:
Equipment P(40,000)
Buildings 10,000 (30,000)
Goodwill (not impaired) P 36,000
a. Investment in Stag Company – 12/31/13 (at acquisition cost) P 206,000
b. Non-controlling interest P -0-
c. Consolidated CI
CI from own operations – Pony (P310,000 – P198,000) P 112,000
CI from own operations – Stag (P104,000 – P74,000) 30,000
Amortization: Equipment (P40,000/8) P5,000
85
Buildings (P10,000/20) (500) ( 4,500)
d. Consolidated Equipment
Total book value (P320,000 + P50,000) P 370,000
Allocation 40,000
Amortization (P5,000 x 3 years) (15,000)
Total P 395,000
Problem 16-4 concluded
e. Consolidated Buildings
Total book value P 288,000
Allocation ( 10,000)
Amortization (P500 x 3 years) 1,500
Total P 279,500
f. Consolidated Goodwill (not impaired) P 36,000
g. Consolidated Common Stock (Pony) P 290,000
h. Consolidated Retained Earnings

Retained earning, Dec. 31, 2013 – Pony P 410,000
Add: Pony’s share of Stag’s adjusted increase in earnings
Net earnings – 2013 (P30,000 – P20,000) P10,000
Amortization ( 4,500) 5,500
Retained earnings, December 31, 2013 P 415,500
Problem 16-5
a. Working Paper Elimination Entries, Dec. 31, 2013
(1) Dividend income 10,000

Dividends declared – Short 10,000
To eliminate intercompany dividends.
(2) Common stock – Short 100,000

Retained earnings – Short 50,000
Investment in Short Company 150,000
To eliminate equity accounts of Short at
date of acquisition
(3) Depreciable asset 30,000

Investment in Short Company 30,000
To allocate excess
86
(4) Depreciation expense 5,000
Depreciable asset 5,000
To amortize allocatedexcess
Problem 16-5 concluded
b. Pony Corporation and Subsidiary

Consolidation Working Paper
December 31, 2013
Pony Short Adjustments & Eliminations Consoli-

Corporation Company Debit Credit dated
Statement of CI
Sales 200,000 120,000 320,000
Dividend income 10,000 (1) 10,000 -
Total 210,000 120,000 320,000
Depreciation 25,000 15,000 (3) 5,000 45,000
Other expenses 105,000 75,000 180,000
Total 130,000 90,000 225,000
CI carried forward 80,000 30,000 95,000
Retained Earnings
Retained earnings, Jan. 1 230,000 50,000 (2) 50,000 230,000
CI from above 80,000 30,000 95,000
Total 310,000 80,000 325,000
Dividends declared 40,000 10,000 (1) 10,000 40,000
Retained earnings, Dec. 31
Carried forward 270,000 70,000 285,000
Statement of FP
Cash 15,000 5,000 20,000
Accounts receivable 30,000 40,000 70,000
Inventory 70,000 60,000 130,000
Depreciable asset (net) 325,000 225,000 (3) 30,000 (4) 5,000 575,000
Investment in Short company 180,000 (2)150,000 -
(3) 30,000
Total 620,000 330,000 795,000
Accounts payable 50,000 40,000 90,000

Notes payable 100,000 120,000 220,000
Common stock
Pony 200,000 200,000
Short 100,000 (2)100,000
87
From above 270,000 70,000 285,000
Total 620,000 330,000 195,000 195,000 795,000
Problem 16-6
a. Working Paper Elimination Entries

NCI 2,000
Dividends declared – Sisa 10,000
(2) Common stock – Sisa 100,000

Retained earnings – Sisa 50,000
Investment in Sisa stock 120,000
NCI 30,000
(3) NCI in CI of subsidiary 6,000

NCI 6,000
b. Popo Corporation and Subsidiary

Consolidated Working Paper
December 31, 2013
Popo Sisa Adjustments & Eliminations Consoli-
Statement of CI
Sales 200,000 120,000 320,000
Total revenue 208,000 120,000 320,000
Depreciation expense 25,000 15,000 40,000
Other expenses 105,000 75,000 180,000
Total expenses 130,000 90,000 220,000
CI 78,000 30,000 100,000
NCI in CI of Sub. (3) 6,000 ( 6,000)
Retained Earnings
Retained earnings, 1/1 230,000 50,000 (2) 50,000 230,000
CI from above 78,000 30,000 94,000
Total 308,000 80,000 324,000
Retained earnings, 12/31
Carried forward 268,000 70,000 284,000
Statement of FP
88
Current assets 173,000 105,000 278,000
Depreciable assets 500,000 300,000 800,000
Investment in Sisa Company 120,000 (2)120,000 -
Total 793,000 405,000 1,078,000
Accumulated depreciation 175,000 75,000 250,000

Current liabilities 50,000 40,000 90,000
Long-term debt 100,000 120,000 220,000
Common stock 200,000 100,000 (2)100,000 200,000
Retained earnings , 12/31
From above 268,000 70,000 284,000
NCI (1) 2,000 (2) 30,000 34,000
(3) 6,000
Total 793,000 405,000 166,000 166,000 1,078,000
Problem 16-6 - Concluded

c. Consolidated Financial Statements
Popo Corporation and Subsidiary

December 31, 2013
Assets
Current assets P278,000
Depreciable assets P800,000
Less: Accumulated depreciation 250,000 550,000
Total assets P828,000

Current liabilities P 90,000
Long-term debt 220,000
Total liabilities P310,000
Stockholders’ Equity
Common stock P200,000
Retained earnings, 12/31 284,000
Minority interest in net assets of subsidiary 34,000 518,000
Total liabilities and stockholders’ equity P828,000

Sales P320,000
Expenses:
Depreciation expense P 40,000
Other expenses 180,000 220,000
NCI in CI of subsidiary 6,000
Attributable to parent P 94,000
89
Consolidated Retained Earnings
Retained earnings, Jan. 1 – Popo P230,000

Consolidated CI attributable to parent 94,000
Total P324,000
Dividends paid – Popo 40,000
Consolidated retained earnings, Dec. 31 P284,000
Problem 16-7
a. Palo Corporation and Subsidiary

December 31, 2013
Palo Sebo Adjustments & Eliminations Consoli-

Statement of CI
Sales 300,000 150,000 450,000
Investment Income 19,000 (1) 19,000 -
Total revenues 319,000 150,000 450,000
Cost of goods sold 210,000 85,000 295,000
Other expenses 23,000 25,000 48,000
Total cost and expenses 258,000 130,000 388,000
Retained Earnings
Retained earnings, Jan. 1 230,000 50,000 (2) 50,000 230,000
CI from above 61,000 20,000 62,000
Total 291,000 70,000 292,000
carried forward 271,000 60,000 272,000
Statement of FP
Cash 37,000 20,000 57,000
Inventory 70,000 60,000 130,000
Buildings and equipment 300,000 240,000 540,000
Investment in Sebo Company 229,000 (1) 9,000 -
(2)200,000
(3) 20,000
Goodwill (3) 20,000 20,000
Total 686,000 350,000 827,000
90
Taxes payable 70,000 55,000 125,000
Common stock 200,000 150,000 (2)150,000 200,000
from above 271,000 60,000 272,000
Total 686,000 350,000 239,000 239,000 827,000
Problem 16-7 - Concluded

b. Consolidated Financial Statements
Palo Corporation and Subsidiary

Sales P450,000
Cost of goods sold 295,000
Gross profit 155,000
Expenses:
Depreciation expenses P45,000
Other expenses 48,000 93,000

Consolidated Retained Earnings
Retained earnings, January 1 – Palo P230,000

Consolidated CI 62,000
Total 292,000
Dividends paid – Palo 20,000
Retained earnings, December 31 P272,000

December 31, 2013
Assets
Cash P 57,000
Accounts receivable 80,000
Inventory 130,000
Buildings and equipment P540,000
Less: Accumulated depreciation 170,000 370,000
Goodwill 20,000
91
Total P657,000

Accounts payable P 60,000
Taxes payable 125,000
Common stock 200,000
Retained earnings, Dec. 31 272,000
Total P657,000
Problem 16-8
1. Determination and Allocation of Excess Schedule:

Company Parent Price NCI Value
Estimated FV (80%) (20%)
Fair value of subsidiary P945,000 P756,000 P189,000
Less book value of interest acquired:
Common stock – S Company 300,000
Retained earnings – S Company 400,000
Total equity 700,000 700,000 700,000
Interest acquired 80% 20%
Book value 560,000 140,000
Excess of fair value over book value 245,000 196,000 49,000
Allocations:
Inventory (30,000)
Land (50,000)
Building (100,000)
Equipment 75,000
Patent (40,000)
Total 145,000
Goodwill P 100,000
Working Paper Elimination Entries - December 31, 2013(not required)
(1) Investment income 94,800

NCI 10,000
Dividends declared – S Company 50,000
Investment in S Company 54,800
(2) Common stock – S 300,000

Retained earnings, Jan. 1 – S 400,000
NCI 140,000
(3) Inventories 30,000

Land 50,000
Building 100,000
Patents 40,000
Goodwill 100,000
92
Equipment 75,000
NCI 49,000
(4) Cost of goods sold 30,000

Inventory 30,000
Equipment (P75,000 / 10) 7,500

Expenses (amortization) 1,500
Buildings (P100,000 / 20) 5,000
Patents (P40,000 / 10) 4,000

NCI 23,700
To recognize NCI in subsidiary CI (P150,000 – 31,500)x 20%
Problem 16-8, Concluded

2. P Company and Subsidiary
P S Adjustments & Eliminations Consoli-
Company Company Debit Credit dated
Statement of CI
Sales 1,000,000 500,000 1,500,000
Cost of sales 400,000 150,000 (4) 30,000 580,000
Gross profit 600,000 350,000 920,000
Expenses 360,000 200,000 (4) 1,500 561,500
Operating income 240,000 150,000 358,500
Investment income 94,800 - (1) 94,800 -
Net /consolidated income 334,800 150,000 358,500
NCI in CI of
Subsidiary (5) 23,700 (23,700)
Retained earnings
Retained earnings, 1/1 600,000 400,000 (2)400,000 600,000
CI from above 334,800 150,000 334,800
Total 934,800 550,000 934,800
Carried forward 834,800 500,000 834,800
Statement of FP
Cash 200,000 100,000 300,000
Inventories 100,000 40,000 (3) 30,000 (4) 30,000 140,000
Land 150,000 (3) 50,000 200,000
Buildings (net) 200,000 (3)100,000 (4) 5,000 295,000
Equipment (net) 298,000 450,000 (4) 7,500 (3) 75,000 680,500
Patent - - (3) 40,000 (4) 4,000 36,000
Investment in S Company 810,800 (1) 54,800 -
(2)560,000
(3)196,000
Goodwill (3) 100,000 100,000
93
Total 1,558,800 1,090,000 1,951,500

Common stock 200,000 300,000 (2)300,000 200,000
Additional paid-in capital 400,000 - 400,000
from above 834,800 500,000 834,800
NCI (1) 10,000 (2)140,000 2022,700
(3) 49,000
(5) 23,700
Total 1,558,800 1,090,000 486,200 486,200 1,951,500
Problem 16-9
a. Investment in Sally Products Co. 160,000

Cash 160,000
To record acquisition of 80% stock of Sally.
Cash 8,000
Dividend income 8,000
To record dividends received from Sally (P10,000 x 80%)
b. Working Paper Eliminating Entries – Dec. 31, 2011

NCI 2,000
Dividends declared – Sally 10,000
(2) Common stock – Sally 100,000

Retained earnings, 1/1/08 –Sally 50,000
Investment in Sally Products 120,000
NCI 30,000
(3) Building and equipment 50,000

Investment in Sally Products 40,000
NCI 10,000
(4) Retained earnings, 1/1 – Sally (prior year) 5,000

Depreciation expense (current year) 5,000
Accumulated depreciation – Bldg 10,000
(5) Accounts payables 10,000

Cash and receivables 10,000

NCI 5,000
94
(P30,000 – P5,000) x 20%
(7) Retained earnings, 1/1 – Sally 7,000

NCI 7,000
To recognize NCI in subsidiary’s prior year earnings
[(P50,000 – P90,000) – P5,000] x 20%

c. Pilar Corporation and Subsidiary
December 31, 2013
Pilar Sally Wood Adjustments & Eliminations Consoli-

Corporation Products Debit Credit dated
Statement of CI
Sales 200,000 100,000 300,000
Total revenue 208,000 100,000 300,000

Depreciation expense 25,000 15,000 (4) 5,000 45,000
Inventory losses 15,000 5,000 20,000
Total cost and expenses 160,000 70,000 235,000
Net /consolidated CI 48,000 30,000 65,000
NCI in CI of
subsidiary (6) 5,000 (5,000)
Retained earnings statement

Retained earnings, 1/1 298,000 90,000 (2) 50,000 326,000
(4) 5,000
(7) 7,000
CI from above 48,000 30,000 60,000
Total 346,000 120,000 386,000
carried forward 316,000 110,000 356,000
Statement of FP
Cash and receivables 81,000 65,000 (5) 10,000 136,000
Inventory 260,000 90,000 350,000
Land 80,000 80,000 160,000
Buildings and equipment 500,000 150,000 (3) 50,000 700,000
Investment in Sally 160,000 (2)120,000 -
(3) 40,000
Total 1,081,000 385,000 1,346,000
95
Accumulated depreciation 205,000 105,000 (4) 10,000 300,000
Accounts payable 60,000 20,000 (5) 10,000 70,000
Notes payable 200,000 50,000 250,000
Common stock 300,000 100,000 (2)100,000 300,000
Retained earnings from 316,000 110,000 356,000
above
NCI (1) 2,000 (2) 30,000 50,000
(3) 10,000
(6) 5,000
(7) 7,000
Total 1,081,000 385,000 242,000 242,000 1,346,000
Problem 16-10
Determination and Allocation of Excess Schedule (not required)
Price paid P220,000

Common stock – Star Company P150,000
Retained earnings, 1/1 – Star Company 50,000 200,000
Goodwill P 20,000
a. Eliminating entries:
E(1) Dividend Income 20,000

Dividends Declared
20,000
Eliminate dividend income from subsidiary.
E(2) Common Stock – Star Company 150,000

Retained Earnings, January 1 50,000
Investment in Star Company Stock
200,000
Eliminate subsidiary equity accounts.
E(3) Goodwill 8,000

Retained Earnings, January 1 12,000
Investment in Star Company
20,000
Assign excess at beginning of year
Porno Corporation and Star Company

December 31, 2013
Porno Star Eliminations

_____Item_____ Corporation Company Debit
Credit Consolidated Statement of CI
96
Sales 350,000 200,000 550,000
Dividend income 20,000 - (1) 20,000 _______
Credits 370,000 200,000 550,000
Other expenses 21,000 10,000 31,000
Debits (316,000) (165,000) __ - ____ (481,000)
CI, carry forward 54,000 35,000 20,000 - 69,000
Retained Earnings Statement

Retained earnings, Jan. 1 262,000 60,000 (2) 50,000
(3) 12,000 260,000
CI, from above 54,000 35,000 20,000 69,000
316,000 95,000 329,000
Dividends declared (20,000) (20,000) ___ - (1) 20,000 (20,000)
Retained earnings, Dec. 31,
carry forward 296,000 75,000 82,000 20,000 309,000
Statement of FP
Cash 46,000 30,000 76,000
Inventory 75,000 65,000 140,000
Buildings and equipment 300,000 240,000 540,000
Investment in Star Company 220,000 (2)200,000
(3) 20,000
Goodwill - - (3) 8,000 8,000
Debits 696,000 375,000 859,000

Accounts payable` 20,000 30,000 50,000
Taxes payable 50,000 35,000 85,000
Common stock
Light Corporation 200,000 200,000
Star Company 150,000 (2)150,000
Retained earnings, from above 296,000 75,000 82,000 20,000 309,000
Credits 696,000 375,000 240,000 240,000 859,000
Problem 16-11
(1) Determination and Distribution of Excess Schedule:
Company Parent NCI

Implied Price Value
Common stock (P10 Par) 100,000
97
Total equity 350,000 315,000 35,000
Excess of fair value over book value P115,000 P103,500 P11,500
Adjustments: Amortization Life

Equipment P115,000 P5,750/yr 20 yrs.
(2) Entries:
Investment in Venus Company 195,300

Retained earnings* 137,475
Investment income** 57,825
To adjust the investment to its carrying amount (equity method)
 Retained earnings account = 90% x P170,000 change in retained earnings – 3 years of

Equipment depreciation (3 x 90% x P5,750) = P137,475.
** Investment income = 90% x (P70,000 - P5,750 equipment depreciation) = P57,825.
Problem 16-11 continued:
Cash 700,000
Investment in Venus Company (8/9 x P418,500 cost
+ P195,300 adjustment) 545,600
Gain on sale of investment 154,400
To record the sale of the 8,000 shares of Venus stock.
Problem 16-12
Entries on Pluto’s books, January 1, 2014:
Investment in Saturn Company 2,960*

Retained earnings – Pluto 2,960
To adjust investment carrying amount of shares sold (equity
method). Remaining shares remain at cost, because they will be
consolidated.
Cash 40,000
Investment in Saturn Company 10,960
Additional paid-in capital – Pluto 29,040
To record sale of shares. Investment eliminated =
[(2,000 ÷ 40,000) x P160,000 original cost] plus P2,960
equity adjustment.
Determination and Allocation of Excess Schedule:
Company Parent NCI

Implied Price Value
Total equity 150,000 120,000 30,000
Excess of fair value over book value P50,000 P40,000 P10,000
98
Adjustment of identifiable accounts: Adjustment Amortization Life
Machine P20,000 P4,000/yr 5 yrs.
Goodwill 30,000
Total P50,000
*Equity adjustment
Income P110,000
Amortization of excess (4 years x P4,000) (16,000)
Dividends (20,000)
Total P74,000
Interest sold (2,000 ÷ 50,000) x P74,000 P2,960
99

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Price paid P 450,000

Non-controlling interest (P450,000/90%) x 10% 50,000

Price paid P4,000,000

Price paid P 450,000

Plant assets – Pall Company (at book value) P 220,000

MULTIPLE CHOICES - COMPUTATIONAL

Price paid P4,000,000

Price paid P 450,000

Price paid P4,000,000

Price paid P 450,000

Plant assets – Pall Company (at book value) P 220,000

MULTIPLE CHOICES - COMPUTATIONAL

Price paid P4,000,000

Price paid P 450,000

Price paid P4,000,000

Price paid P 450,000

Plant assets – Pall Company (at book value) P 220,000

MULTIPLE CHOICES - COMPUTATIONAL

Price paid P4,000,000

Price paid (P247,095 + P69,955) P317,050

Billed Price % Cost Overvaluation

Shipment to branch, at billed price (P375,000 x 120%) P450,000

Price paid (P247,095 + P69,955) P317,050

Patent 7,650 353,430

Billed Price % Cost Overvaluation

Shipment to branch, at billed price (P375,000 x 120%) P450,000

Price paid P2,550,000

APIC: [(P2,550,000 – P1,200,000) - P35,000*] P1,315,000

14-6: a (at fair value at date of acquisition)

Abel net income, January to December (P80,000 + P1,320,000) P1,400,000

Price paid P 800,000

Price paid P 700,000

Price paid P2,550,000

APIC: [(P2,550,000 – P1,200,000) - P35,000*] P1,315,000

14-6: a (at fair value at date of acquisition)

Abel net income, January to December (P80,000 + P1,320,000) P1,400,000

Price paid P 800,000

Price paid P 700,000

Price paid P2,550,000

APIC: [(P2,550,000 – P1,200,000) - P35,000*] P1,315,000

14-6: a (at fair value at date of acquisition)

Abel net income, January to December (P80,000 + P1,320,000) P1,400,000

Price paid P 800,000

Price paid P 700,000

NCI in CI of subsidiary (P240,000 x 10%) P 24,000

Retained earnings, Jan. 2, 2013 – Puzon P500,000

Dividends paid – Puzon ( 50,000)

Price price P1,700,000

NCI, January 2, 2013 [(P975,000/80%) x 20%] P243,750

Presto’s CI from own operations P140,000

Investment in Siso Company (at date of acquisition) P600,000

Dividend income (P30,000 x 5%) P 1,500

Consolidated retained earnings:

Dividends paid, 2013 – Pepe ( 60,000)

Price paid P 700,000

Amortization (P100,000 / 10) x 2/12 5,000

Consolidated net income – 2013

Price paid, January 2, 2013 P216,000