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    PREA4

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    Buenaventura, Elijah B.
    1. Perez Company acquired 100% of Santos Company for ₱542,000, recognizing a gain of ₱173,000 from the acquisition due to the fair value of net assets acquired exceeding the price paid. 2. Perez Company then acquired 80% of Santos Company for ₱542,000, recognizing a gain of ₱73,000. 3. The consolidation working papers show the elimination of intercompany balances and adjustments to conform accounting policies between the two companies in preparation for consolidated financial statements.

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    PREA4

    Uploaded by

    Buenaventura, Elijah B.
    18 views9 pages
    1. Perez Company acquired 100% of Santos Company for ₱542,000, recognizing a gain of ₱173,000 from the acquisition due to the fair value of net assets acquired exceeding the price paid. 2. Perez Company then acquired 80% of Santos Company for ₱542,000, recognizing a gain of ₱73,000. 3. The consolidation working papers show the elimination of intercompany balances and adjustments to conform accounting policies between the two companies in preparation for consolidated financial statements.

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    Perez and Santos Company

    Original Title

    PREA4 (2)

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    1. Perez Company acquired 100% of Santos Company for ₱542,000, recognizing a gain of ₱173,000 from the acquisition due to the fair value of net assets acquired exceeding the price paid. 2. Perez Company then acquired 80% of Santos Company for ₱542,000, recognizing a gain of ₱73,000. 3. The consolidation working papers show the elimination of intercompany balances and adjustments to conform accounting policies between the two companies in preparation for consolidated financial statements.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    18 views9 pages

    PREA4

    Uploaded by

    Buenaventura, Elijah B.
    1. Perez Company acquired 100% of Santos Company for ₱542,000, recognizing a gain of ₱173,000 from the acquisition due to the fair value of net assets acquired exceeding the price paid. 2. Perez Company then acquired 80% of Santos Company for ₱542,000, recognizing a gain of ₱73,000. 3. The consolidation working papers show the elimination of intercompany balances and adjustments to conform accounting policies between the two companies in preparation for consolidated financial statements.

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    © All Rights Reserved
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    of 9

    PROBLEM 1

    Price paid ₱542,000


    Less fair value of net assets acquired 715,000
    Income from acquisition (₱173,000)

    D&A Schedule
    Fair value Parent (100%)
    Fair value of subsidiary ₱542,000 ₱542,000
    Less book value of interest acquired
    Common stock ₱200,000
    Retained earnings 470,000
    Total equity ₱670,000 ₱670,000
    Interest acquired 100%
    Book value ₱670,000
    Excess (₱128,000) (₱128,000)
    Adjustment of identiafiable accounts:
    Inventory (140,000 - 130,000) -₱ 10,000
    Land (120,000 - 80,000) -40000
    Equipment (180,000 - 200,000) 20000
    Long-term investment in Securities
    (140,000-125,000) -15000
    Total (₱45,000)
    Income from acquisition (₱173,000)

    Common stock ₱200,000


    Retained earnings 470,000
    Investment in Susan Co. ₱670,000

    Inventory ₱10,000
    Land 40,000
    Long-term investment in Securities 15,000
    Investment in Santos Company 128,000
    Equipment ₱20,000
    Retained earnings - P company (Gain) 173,000
    Perez Company and Santos Company
    Consolidation Working Paper
    December 8, 2021
    Eliminations and
    Perez Santos Adjustments
    Company Company Debit Credit
    Assets
    Cash ₱100,000 ₱100,000
    Accounts receivable 200,000 150,000
    Inventory 150,000 130,000 (2) ₱10,000
    Land 50,000 80,000 (2) 40,000
    Equipment (net) 300,000 200,000 (2) ₱20,000
    Investment in Santos Co. 542,000 - (1) 670,000
    (2) 128,000
    Long-term Inv. in Securities 100,000 125,000 (2) 15,000
    Total ₱1,442,000 ₱785,000

    Liabilities and Equity


    Accounts payable ₱175,000 ₱115,000
    Common stock:
    Perez Company 400,000
    Santos Company 200,000 (1) 200,000
    Additional paid-in capital:
    Perez Company 200,000
    Retained earnings:
    Perez Company 667,000 (2) 173,000
    Santos Company 470,000 (1) 470,000

    Total ₱1,442,000 ₱785,000 ₱863,000 ₱863,000

    PROBLEM 2

    Price paid ₱542,000


    Non-controlling interest (at fair value) 100,000
    Total ₱642,000
    Less fair value of net assets acquired 715,000
    Income from acquisition (₱73,000)

    D&A Schedule
    Fair value Parent (80%)
    Fair value Parent (80%)
    Fair value of subsidiary ₱642,000 ₱542,000
    Less book value of interest acquired
    Common stock ₱200,000
    Retained earnings 470,000
    Total equity ₱670,000 ₱670,000
    Interest acquired 80%
    Book value ₱536,000
    Excess (₱28,000) ₱6,000
    Adjustment of identiafiable accounts:
    Inventory (140,000 - 130,000) -₱ 10,000
    Land (120,000 - 80,000) -40000
    Equipment (180,000 - 200,000) 20000
    Long-term investment in Securities
    (140,000-125,000) -15000
    Total (₱45,000)
    Income from acquisition (₱73,000)

    Common stock ₱200,000


    Retained earnings 470,000
    Investment in Susan Co. ₱536,000
    Non-controlling interest (NCI) 134,000

    Inventory ₱10,000
    Land 40,000
    Long-term investment in Securities 15,000
    Non-controlling interest (NCI) 34,000
    Equipment ₱20,000
    Investment in Susan Co. 6,000
    Retained earnings - P company (Gain) 73,000

    Perez Company and Santos Company


    Consolidation Working Paper
    December 8, 2021
    Eliminations and
    Perez Santos Adjustments
    Company Company Debit Credit
    Assets
    Cash ₱100,000 ₱100,000
    Accounts receivable 200,000 150,000
    Inventory 150,000 130,000 (2) ₱10,000
    Land 50,000 80,000 (2) 40,000
    Equipment (net) 300,000 200,000 (2) ₱20,000
    Investment in Santos Co. 542,000 - (1) 536,000
    (2) 6,000
    Long-term Inv. in Securities 100,000 125,000 (2) 15,000
    Total ₱1,442,000 ₱785,000

    Liabilities and Equity


    Accounts payable ₱175,000 ₱115,000
    Common stock:
    Perez Company 400,000
    Santos Company 200,000 (1) 200,000
    Additional paid-in capital:
    Perez Company 200,000
    Retained earnings:
    Perez Company 667,000 (2) 73,000
    Santos Company 470,000 (1) 470,000

    NCI to be consolidated (1) 134,000


    (2) 34,000

    Total ₱1,442,000 ₱785,000 ₱769,000 ₱769,000

    Perez Company and Santos Company


    Consolidated Statement of Financial Position
    December 8, 2021
    Assets
    Current Assets
    Cash ₱200,000
    Accounts receivable 350,000
    Inventory 290,000
    Total ₱840,000

    Non-current assets
    Land ₱170,000
    Equipment (net) 480,000
    Long-term investment in Securities 240,000
    Total 890,000
    Total assets ₱1,730,000
    Liabilities and Equity
    Liabilities
    Accounts payable ₱290,000

    Stockholder's Equity
    Common stock ₱400,000
    Additional paid-in capital: 200,000
    Retained earnings 740,000

    Total controlling equity ₱1,340,000


    Non-controlling equity 100,000

    Total equity 1,440,000


    Total liabilities and equity ₱1,730,000
    NCI
    -

    ₱670,000
    -
    -
    -
    Consolidated

    ₱200,000
    350,000
    290,000
    170,000
    480,000

    240,000
    ₱1,730,000

    ₱290,000

    400,000

    200,000

    840,000

    ₱1,730,000

    NCI (20%)
    NCI (20%)
    100,000

    ₱670,000
    20%
    ₱134,000
    (₱34,000)

    Consolidated

    ₱200,000
    350,000
    290,000
    170,000
    480,000

    240,000
    ₱1,730,000

    ₱290,000

    400,000

    200,000

    740,000

    100,000

    ₱1,730,000

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