Basak Malut-lut, National Highway

Marawi City, 9700

www.rcakicfound.com

HOME OFFICE, BRANCH, AND AGENCY ACCOUNTING Required:

1. What is the amount of the unrealized profit in the separate books of the
EXERCISE PROBLEMS home office on December 31?
PROBLEM 1. Selected information from the trial balances of the home office 2. What is the branch beginning inventory that came from outside purchases?
and the branch of Pinnacle Company on December 31 is provided. The branch 3. What is the Cost of goods available for sale of the branch?
acquires merchandise from the home office and outside suppliers. 4. What is the total ending inventory to be shown on the combined financial
Home Office Branch statements?
Sales ……………………………….. P60,000 P30,000
Shipments to branch………………. 8,000 PROBLEM 4. The National Home Company ships and bills merchandise to its
Allowance for overvaluation of provisional branch at cost. The branch carries its own accounts receivable and
branch inventory ………………..… 3,600 makes its own collections. The branch also pays its expenses.
Shipments from home office…….… 10,000
Purchase (outsiders)………….…….. 35,000 5,500 The transactions for 2024 are reflected in the branch trial balance that follows;
Merchandise inventory, beginning…. 20,000 15,000 Debit Credit
Expenses ……………………………. 14,000 6,000 Cash………………………………………….. 11,900
National Home Co. Current………………… 90,000
Additional information: Shipments from National Home Co……….. 120,000
Merchandise inventory, December 31 Accounts Receivable ………………………. 62,500
Home office ……………………………………P20,000 Expenses…………………………………….. 8,100
Branch (P7,500 from home office and Sales…………………………………………. 112,500
P2,500 from outsiders)………………………..10,000 Total………………………………………….. 202,500 202,500
Required:
1. The markup on merchandise shipments from home office to branch is? December 31 inventory……………………… 30,000
2. How much of the December 1 inventory of the branch represent Required:
purchases from outsiders and goods shipped from home office? 1. The markup on merchandise shipments from home office to branch is?
3. The net income reported by the branch in its separate books is? 2. The net profit of the branch in its separate books is?
4. The net income reported by the home office in its separate books is? 3. The correct/true branch net income?
5. The correct/true branch net income? 4. The Branch Current Account in the home office books
6. The combined net income for Home office and branch is? 5. What is the balance of the unrealized profit in branch ending inventory on
7. The ending inventory in the books of the branch is? December 31?
8. The ending inventory in the combined financial statements?
PROBLEM 5. A branch store in Caloocan was established by Carlo Company
PROBLEM 2. The following data were provided by the Home Office and on March 1. Merchandise was billed to the branch at 125% of cost. Shipments
Branch for the year ended December 31: of merchandise were as follows;
Home Office Branch March 5………………………………………P 120,000 (at billed price)
Sales to outside customer………..1,000,000 800,000 March 10…………………………………….. 50,000 (at billed price)
Beginning inventory………………. 300,000 140,000 March 20 ……………………………………. 35,000 (at billed price)
Purchases from outside supplier… 800,000 250,000
Shipment to branch …………………400,000 On March 22, the branch returned defective merchandise worth P3,050. On
Shipment from Home Office ……… 500,000 March 31, the branch reported a net loss of (6,200) and merchandise inventory
Ending inventory……………………. 100,000 200,000 of P85,000.
Operating expenses……………….. 200,000 100,000
Required:
 Last year, the Home Office billed its branch with a gross profit rate of 1. In the home office books, the cost of merchandise sold by branch was;
40% based on cost. 2. In the separate branch books, the cost of merchandise sold was;
 Half of the beginning inventory of the branch was acquired from outside 3. What is the balance of the realized profit in branch ending inventory on
suppliers. December 31?
 The ending inventory of the branch is broken down as follows: 4. The correct/true branch net income?
 60% from outside suppliers
 26% from current year shipment from home office PROBLEM 6. The following information pertains to shipments of merchandise
 14% from prior year shipment from home office from Home Office to Branch during 2024:
Required:
1. What is the net income of the branch in its books for the year ended Home Office cost of merchandise…………………..P 160,000
December 31? Intracompany billing………………………………….. 200,000
2. What is the cost of goods sold of the branch in the combined statements Sales by branch……………………………………… 250,000
for the year ended December 31? Unsold merchandise at Branch on December 31…. 20,000
3. What is the combined net income to be presented by the Home Office in
the Statement of Comprehensive Income for the year ended December Required:
31? In the combined income statement of Home Office and Branch for the year
4. What is the balance of the unrealized profit in branch ending inventory ended December 31, 2024,
on December 31? 1. what amount of the above transactions should be included in sales?
2. The markup on merchandise shipments from home office to branch is;
PROBLEM 3. Home office bills its branch for merchandise shipments at 30% 3. In the separate branch books, the cost of merchandise sold was;
above cost. The following are some of the account balances on the books of
home office and its branch as of December 31: PROBLEM 7. The Aparri branch of Cagayan Products, nc. Buys merchandise
Home Office Branch from third parties and receives merchandise from the fome office for which it is
Inventory, January 1………………………..P115,000 P101,500 billed at 20% above cost. Below are excerpts from the trial balances and data
Shipments from Home Office ………….… 267,150 on the home office and Aparri branch for the month just ended:
Purchases. ………………………….………2,565,500 350,000
Shipments to branch (@ billed price)………332,150 Home office books;
Branch Inventory Allowance…………….. 91,650 Cr. Allowance for overvaluation of branch merchandise……… P 740,000
Sales……………………………………….. 2,100,000 1,260,000 Cr. Shipment to branch…………………………………………….. 1,700,000
Operating expense…………………………. 253,500 46,150 Branch Books;
Dr. Beginning inventory……………………………………………P 2,880,000
Per physical count, the ending inventory of the branch is P69,050 including Dr. Shipments from Home office…………………………………. 2,040,000
goods from outside purchases of P45,650; the ending inventory of the home Purchases………………………………………………………….. 820,000
office is P230,000.
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 Basak Malut-lut, National Highway
Marawi City, 9700
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Month end additional data:

Ending inventory of branch……………………………………… P 2,920,000 PRO-FORMA:
From home office (at billed proce)……………………………. P 2,340,000
From outsiders, at cost………………………………………….. 580,000 COST OF GOODS SOLD:
 (INTRACOMPANY TRANSACTIONS)
Required: Cost Billed Price AOI
For the month just ended; BI xx xx xx
1. The total cost of goods sold of Aparri Branch at cost (net of overvaluation); Shipments xx xx xx (%= ___)
2. The amount of allowance for overvaluation that was realized from branch -Returns (xx) (xx) (xx)
sales? GAS xx xx xx
3. What is the net income of the branch in its books for the year ended EI (xx) (xx) (xx) (Unrealized profit)
December 31? COS xx xx xx (Realized profit)
4. The net income reported by the branch in its separate books is?
5. The correct/true branch net income?  Outside Branch transactions-COS:
BI xx
Purchases xx
PROBLEM 8. The home office bills its Aklan Branch at 125% of cost. During -PR (xx)
the year 2024, goods costing P300,000 were shipped to the branch. The TGAS xx
account “Allowance for overvaluation of branch inventory”, after adjustment, EI (xx)
shows a balance of P14,000 at the end of the year. COS (outside) xx

Required:  Home Office-COS

1. Compute the amount of ending inventory at cost; BI xx
2. Compute the ending inventory at billed price; Purchases xx
-PR (xx)
PROBLEM 9. Lacoste Philippines hastwo merchandise outlets, its main store -Ship. to branch (xx)
in Manila and its Cebu City branch. For control purposes, all purchases are TGAS xx
nade by the main store, and shipments to the Cebu City branch are at cost plus EI (xx)
10%. On January 1, 2024, the inventories of the main store and the Cebu City COS (HO) xx
branch were P13,600 and P3,960, respectively. During 2024, the main store
purchased merchandise costing P40,000 and shipped 40% of these to the NET PROFIT:
Cebu City branch.  Net Profit in the branch books
Sales xx
At December 31, 2024, the following Journal entry was made to prepare the -COS @ BP (xx)
Cebu City branch books for the next accounting period; -COS outside (xx)
Sales…………………………………………32,000 -OPEX (xx)
Inventory……………………………………. 4,840 Net Profit xx
Inventory……………………… 3,960
Shipments from main store…. 17,600  Net Profit in the Home office books/ True/Real Net profit
Expenses……………………… 10,480 Sales xx
Main store……………………. 4,800 -COS (HO) (xx)
-OPEX (xx)
Required; Net Profit xx
1. What was the actual branch income of 2024 on a cost basis; +Net profit branch xx
2. What was the branch income at billed price; +Realized profit xx
3. If the main store has P11,200 worth of inventory on hand at the end of 2024, TRUE NET INCOME xx
the total inventory that should appear on the combined balance sheet at
December 31, 2024;

PROBLEM 10. The Manila branch of the Great Company is billed for
merchandise by the home office at 20% above cost. The branch in turn prices
merchandise for sales purposes at 25% above billed price. On February 16 all
of the branch merchandise is destroyed by fire. No insurance was maintained.
Branch account shows the following information;
Merchandise inv, January 1 (at billed price)…………….P26,400
Shipments from home office (Jan 1-Feb 16)…………… 20,000
Sales………………………………………………………… 15,000
Sales returns………………………………………………. 2,000
Sales allowances…………………………………………. 1,000

1. What was the cost of merchandise destroyed by fire?

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 Basak Malut-lut, National Highway
Marawi City, 9700
www.rcakicfound.com

PROBLEM 1. Lakers Trading Co. Operates a branch in Dagupan City. At close

of business on December 31, 2024, Dagupan branch account in the home
office books showed debit balance of P225,770. The interoffice accounts were
in agreement at the beginning of the year. For purposes of reconciling the
interoffice accounts, the following facts were ascertained:

1. An office equipment casting the home office P3,500 was picked up by

the branch as P350.
2. Insurance premium of P675 charged by the home office was taken up
twice by te branch.
3. Freight charge on merchandise made by the home office for P1,125 was
recorded in the branch books as P1,215.
4. Home office credit memo representing a discount on merchandise for
P800 was not recorded by the branch.
5. The branch failed to take up a P700 debit memo from the home office
representing the share of the branch in advertising.
6. The home office inadvertently recorded a remittance for P3,000 from its
Cebu branch as remittance from its Dagupan branch.

Compute the balance as of December 31, 2024.

Required:
1. Unadjusted Balance of the Home Office Account?
2. Adjusted Balance of the reciprocal account?

PROBLEM 2. After examining on a comparative basis the interoffice account of

the Bulacan Company with its suburban Branch and the similar account carried
on the latter’s books, the following discrepancies at the close of the business
on June 30, 2024 were seen:

a. A charge for labor by the Home Office, P500 was recorded twice by the
branch.
b. A charge of P895 was made by the Home Office for freight on
merchandise, but the amount was recorded by the Branch as P89.50.
c. A charge of P980 (furniture and fixture) on the Home office books was
taken up by the Branch as P890.
d. A credit by he Home Office for P350(merchandise allowances) was
taken up by the Branch as P400.
e. The Home Office charged the Branch P425 for interest on open account
which the branch failed to take up in full: instead, the branch sent to
Home Office a wrong adjusting memo,reducing the charged by P100
and set up a liability for the net amount.
f. The Home Office received P5,000 from the sale of a truck which it
erroneously credited to the Branch; the Branch did not charge the Home
Office therewith.
g. The Branch by mistake sent the Home Office a debit note for P370
representing its proportion of a bill for repairs of truck; the Home Office
did not record it.
h. The Branch inadvertently received a copy of the Home Office entry
dated July 19, 2024 correcting item (f) and entered a credit in favor of
the Home Office as of June 30, 2024.

At June 30, 2024, the unadjusted balance of the Branch current account on the
Home Office books showed P175,520. at the beginning of the year, the
interoffice accounts were in balance. Compute the;

Required:
1. unadjusted balance of the Home Office current account on the branch
books, and the branch books?
2. the adjusted balance of the reciprocal account on June 30, 2024?

BUSINESS COMBINATION

-IFRS 3 defines business combination as a transaction or other

events in which an acquirer obtains control of one or more businesses (the
acquiree).

Types of Acquisition:

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 Basak Malut-lut, National Highway
Marawi City, 9700
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1. Assets Acquisition -it takes place when the Retained Earning

company’s assets are acquired directly and liabilities are assumed. Total Shareholder’s Equity
 Statutory Merger- refers to the absorption of one or more
existing legal entites by aother existing company that PROBLEM 2. A Co. Paid the following;
combines as the sole surviving legal entity. Finders fee P40,000
 Statutory consolidation- refers to the combining of two or Accountant’s fee (Advisory) 10,000
more existing legal entities into one new legal entity. Legal fees (Advisory) 15,000
2. Stock Acquisition- a controlling interest (typically more than 50%) of Salaries of A Co’s employees assigned to the
another voting common stock is acquired.t Implementation of the merger 16,000
Cost of closing duplicate facilities 12,000
ACQUISITION METHOD OF ACCOUNTING FOR BUSINESS COMBINATION Cost of shareholder’s meeting to vote on the
1. Identify the acquirer merger 14,000
2. Determine the acquisition date Cost of printing stock certificates 7,000
3. Determine the consideration given (price paid) by the acquirer. Audit and accountant’s fee related to the stock
4. Recognize and measure the identifiable assets acquired, the Issuance 3,000
liabilities assumed and any non-controlling interest (formerly called SEC registration fess 5,000
minority interest) in the acquire. Any resulting goodwill or gain from Stock listing application fees 4,000
a bargain purchase should be recognized.
Based on the preceding information, under the cquisition method following
ASSETS ACQUISITION PFRS 3,

PROBLEM 1. Coke company and Pepsi company agreed to a combination on Required:

January 1, 2024. On the date of the combination, the companies reported the 1. What amount of relating to business combination would be expensed?
following data: (in thousands) 2. The total stock issuance cost would be?
Coke company Pepsi company
Book value Fair value Book value Fair value PROBLEM 3. AA ltd., a supplier of snooker equipment, agreed to acquire the
Cash and Receivables P290 P290 P20 P20 business of a rival firm, BB Lts. Taking over all assets and liabilities as at June
Inventory 100 150 30 42 1, 2024.
Land 100 140 10 15
Plant and Equipment 400 300 200 140 The price agreed upon was P60,000; payable P20,000 cash and the balance
Less: Accumulated Depreciation (150) (80) by the issue to the selling company of 16,000 fully paid shares in AA ltd. These
Total Assets P740 P880 P180 P217 shares having a fair value of 2.50 per share.

Current liabilities P80 P80 P20 P20 The trial balance of the two companies as at June 1, 2024 were as follows:
Capital Stock 200 20 AA BB
APIC 20 5 Share capital P100,000 P 90,000
Retained Earnings 440 135 Retained earnings 12,000 (24,000)
Total Liabilities and Equities P740 P180 Accounts Payable 2,000 20,000
Cash 30,000 -
Coke company has 10,000 shares of its P20 par value shares outstanding on Plant assets 50,000 30,000
January 1, 2024, and Pepsi Company has 4,000 shares of P5 par value stock Inventory 14,000 26,000
outstanding. The market values of the shares are P300 and P50, respectively Accounts Receivable 8,000 20,000

Case 1: Purchase price equals the fair value of net identifiable assets All the identifiable net assets of BB Ltd. were recorded by BB Ltd. at fair value
acquired. except for the inventory which was considered to be worth P28,000. The plant
Coke Co. acquired Pepsi company’s net assets by paying P197,00 cash. Coke had an expected remaining life of five years.
Co. pays professional fees of P20,000 to accomplish the acquisition and stock
issuance cost of P1,000. The business combination was completed and BB Ltd. went into liquidation.
Costs of liquidation amounted to P1,000. AA ltd. incurred incidental costs of
Case 2: Purchase price exceeds the fair value of net identifiable assets P500 in relation to the acquisition costs. Costs of issuing shares in AA Ltd were
acquired. P400.
Coke Co.. issues 500 shares and 75,000 cash for Pepsi Co’s net assets. Coke
Co. pays professional fees of P20,000 to accomplish the acquisition and stock Required:
issuance cost of P5,000. 1. The price consideration would be?
2. The Total fair value of net assets acquired would be?
Case 2: Purchase price below the fair value of net identifiable assets acquired. 3. What is the amount of goodwill to be recognized in the combined
Coke Co.. issues 500 shares and P30,000 cash for Pepsi Co’s net assets. financial statements?
Coke Co. pays professional fees of P20,000 to accomplish the acquisition and 4. The Gain on bargain purchase would be?
stock issuance cost of P25,000. 5. Acquisition expenses will be recorded at what amount?
6. The amount of APIC that would be credited as a result of business
Compute the following amounts; combination would be?
7. What is the total amount of inventory after acquisition?
CASE 1 CASE 2 CASE 3 8. The total assets after business combination is?
Price consideration given 9. The total liabilities would be?
Fair Value of Net Assets 10. The Total stock holder’s equity as a result of business combination
Goodwill would be?
Gain on Bargain purchase
Cash
Marketable securities
Inventory
Land
Building
Equipment CONSLOLIDATION AT THE DATE OF ACQUISITION (STOCK
Total Assets ACQUISITION)
Total Liabilities
Common Stock On January 1, 2024 statement of Financial Position of Sotto Company at book
Additional Paid in Capital and market values are as follows;
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 Basak Malut-lut, National Highway
Marawi City, 9700
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Pedro 2. The total minority interest would be?

Sotto 3. How much is the consolidated total asset at the date of
Book value Book Value Fair Value acquisition?
Cash 800 ,000 400,000 400,000 4. How much is the total shareholder’s equity at the date of
Accounts Receivable 600,000 300,000 300,000 acquisition?
Inventories 200,000 100,000 150,000
Property Plant and Equipment 1,800,000 900,000 1,000,000 F. Pedro Company paid P950,000 in cash for 80% of Sotto Company’s
Total Assets 3,400,000 1,700,000 1,850,000 common stock. Pedro Company also paid P80,000 of professional fees to
effect the combination. The fair value of NCI is assessed to be P230,000.
Current Liabilities 600,000 300,000 300,000
Long-term Liabilities 1,000,000 500,000 460,000 1. How much is the Goodwill/Gain on Acquisition?
Common stock, Par 1 200,000 100,000 2. The total minority interest would be?
Additional Paid in Capital 400,000 200,000 3. How much is the consolidated total asset at the date of
Retained Earnings 1,200,000 600,000 acquisition?
Total Liab and SHE 3,400,000 1,700,000
4. How much is the total shareholder’s equity at the date of
acquisition?
Assume the following independent cases;

A. Pedro Company paid P950,000 in cash for 100% of Sotto Company’s

common stock. Pedro Company also paid P80,000 of professional fees to
effect the combination.
1. How much is the Goodwill/Gain on Acquisition?
2. How much is the consolidated total asset at the date of acquisition?
3. How much is the total shareholder’s equity at the date of
acquisition?

B. Assuming Pedro company acquired 100% of the outstanding stock of

Sotto Company resulting to a good will of P200,000, contingent
consideration is P100,000.
1. How much is the price paid of Pedro Company’s stock?
2. How much is the consolidated total asset at the date of acquisition?
3. How much is the consolidated total liabilities at the date of
acquisition?
4. How much is the total shareholder’s equity at the date of
acquisition?

C. Pedro Company paid P950,000 in cash for 80% of Sotto Company’s

common stock. Pedro Company also paid P80,000 of professional fees to
effect the combination. The fair value of NCI is assessed to be P230,000.
1. How much is the Goodwill/Gain on Acquisition?
2. The total minority interest would be?
3. How much is the consolidated total asset at the date of
acquisition?
4.How much is the total shareholder’s equity at the date of
acquisition?

D. Assuming Pedro Company acquired 70% of the outstanding common

stock of Sotto Company for 875,000.

 Assuming NCI is measured at fair value of P150,000,

1. The NCI would be?
2. How much is the Goodwill/Gain on Acquisition?

 Assuming the NCI is measured as proportionate to the fair value of

net asset of acquiree,
1. The NCI would be?
2. How much is the Goodwill/Gain on Acquisition?
 Assuming the NCI is measured at Fair value, the total consideration
price paid by Pedro was 1,250,000,
1. The NCI would be?
2. How much is the Goodwill/Gain on Acquisition?

E. Assuming Pedro Company acquired 80% of the outstanding common

stock of Sotto Company for 1,250,000 and NCI is measured at fair value
of P250,000,

BUSINESS COMBINATION (SUBSEQUENT TO DATE OF

ACQUISITION)

1. How much is the Goodwill/Gain on Acquisition?

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 Basak Malut-lut, National Highway
Marawi City, 9700
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PROBLEM 1. On January 1, 2024 statement of Book Value Book Value Fair Value
Financial Position of Sotto Company at book and market values are as follows; Cash 800,000 400,000 400,000
Pedro Company Sotto Company Accounts Receivable 600,000 300,000 300,000
Book Value Fair Value Inventories 200,000 100,000 150,000
Cash 800,000 400,000 Property Plant and Equipment 1,800,000 900,000 1,000,000
Accounts Receivable 600,000 300,000 Total Assets 3,400,000 1,700,000 1,850,000
Inventories 200,000 100,000
Property Plant and Equipment 1,800,000 900,000 Current Liabilities 600,000 300,000 300,000
Total Assets 3,400,000 1,700,000 Long-term Liabilities 1,000,000 500,000 460,000
Common stock, Par 1 200,000 100,000
Current Liabilities 600,000 300,000 Additional Paid in Capital 400,000 200,000
Long-term Liabilities 1,000,000 500,000 Retained Earnings 1,200,000 600,000
Common stock, Par 1 200,000 100,000 Total Liab and SHE 3,400,000 1,700,000
Additional Paid in Capital 400,000 200.000
Retained Earnings 1,200,000 600,000 Pedro Company paid P950,000 in cash for 80% of Sotto Company’s common
Total Liab and SHE 3,400,000 1,700,000 stock. Pedro Company also paid P80,000 of professional fees to effect the
combination. The fair value of NCI is assessed to be P230,000.
Pedro Company paid P720,000 in cash for 80% of Sotto Company’s common
stock. Pedro Company also paid P80,000 of professional fees to effect the On December 31, 2024, the company reported the following;
combination. The fair value of NCI is assessed to be P180,000. Parent Subsidiary
The Comprehensive Income from
On December 31, 2024, the company reported the following; Its own operations 1,000,000 200,000
Parent Subsidiary Dividends declared and paid 300,000 120,000
The Comprehensive Income from Total Assets 5,000,000
Its own operations 1,000,000 200,000 Total Liabilities 3,000,000
Dividends declared and paid 300,000 120,000 Common stock, Par 1 1,000,000
Total Assets 5,000,000 Additional Paid in Capital 300,000
Total Liabilities 3,000,000 Retained Earnings 700,000
Common stock, Par 1 1,000,000
Additional Paid in Capital 300,000 On January 5, 2024, Php 50,000 of the inventory were sold to outsiders; the
Retained Earnings 700,000 Property Plant and Equipment have a remaining life of 10 years from the date
of acquisition.
Compute the amount of the following at the end of the year;
1. Goodwill/Gain on Acquisition Compute the amount of the following at the end of the year;
2. Comprehensive Income of Parent from its own operations 1. Goodwill/Gain on Acquisition
3. Comprehensive Income of Subsidiary 2. Comprehensive Income of Parent from its own operations
4. Consolidated Comprehensive Income 3. Comprehensive Income of Subsidiary
5. Comprehensive Income attributable to parent 4. Consolidated Comprehensive Income
6. Non-controlling interest shares in Comprehensive income 5. Comprehensive Income attributable to parent
7. Retained Earnings of Parent 6. Non-controlling interest shares in Comprehensive income
8. Retained Earnings of Subsidiary 7. Retained Earnings of Parent
9. Consolidated Retained Earning 8. Retained Earnings of Subsidiary
10. Non-controlling interest 9. Consolidated Retained Earning
11. Investment in Sotto Company that will be included in the 10. Non-controlling interest
elimination entries would be 11. Investment in Sotto Company that will be included in the
elimination entries would be
On December 31, 2025, the company reported the following;
Parent Subsidiary On December 31, 2025, the company reported the following;
The Comprehensive Income from Parent Subsidiary
Its own operations 600,000 400,000 The Comprehensive Income from
Dividends declared and paid 150,000 87,500 Its own operations 600,000 400,000
Dividends declared and paid 150,000 87,500
Compute the amount of the following at the end of the year;
1. Goodwill/Gain on Acquisition Compute the amount of the following at the end of the year;
2. Comprehensive Income of Parent from its own operations 1. Goodwill/Gain on Acquisition
3. Comprehensive Income of Subsidiary 2. Comprehensive Income of Parent from its own operations
4. Consolidated Comprehensive Income 3. Comprehensive Income of Subsidiary
5. Comprehensive Income attributable to parent 4. Consolidated Comprehensive Income
6. Non-controlling interest shares in Comprehensive income 5. Comprehensive Income attributable to parent
7. Retained Earnings of Parent 6. Non-controlling interest shares in Comprehensive income
8. Retained Earnings of Subsidiary 7. Retained Earnings of Parent
9. Consolidated Retained Earning 8. Retained Earnings of Subsidiary
10. Non-controlling interest 9. Consolidated Retained Earning
11. Investment in Sotto Company that will be included in the 10. Non-controlling interest
elimination entries would be 11. Investment in Sotto Company that will be included in the
elimination entries would be

PROBLEM 2. On January 1, 2024 statement of Financial Position of Sotto

Company at book and market values are as follows;
Pedro Company Sotto Company
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Marawi City, 9700
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