Parry Corporation owns an 80% interest in Starry Corporation acquired several years ago.

Starry
regularly sells merchandise to its parent at 125% of Starry’s cost. Gross profit date of Parry and Starry
for the year 2012 are as follows:
Parry Stary
SALES 1,000,000 800,000
COST OF SALES 800,000 640,000
GROSS PROFIT 200,000 160,000
During 2012, Parry purchased inventory items from Starry at a transfer price of P400,000. Parry’s
December 31, 2011 and 2012 inventories included goods acquired from Starry of P100,000 and P125,000
respectively. The consolidated sales of Parry Corporation and subsidiary for 2012 were:
a. P1,800,000 c. P1,400,000
b. P1,425,000 d. P1,240,000

Parry sales 1,000,000

Starry sales 800,000
TOTAL 1,800,000
LESS: Intercompany sales 400,000
Consolidated cost of sales 1,400,000
Using the same information in previous, the unrealized profit in the year end December 2011
and 2012 inventories were:
a. P100,000 and P125,000 respectively
b. P800,000 and P100,000 respectively
c. P20,000 and P25,000 respectively
d. P16,000 and P20,000 respectively

Realized profit in beginning inventory of Parry

( 100,000 x 20% ) P20,000

Unrealized profit in ending inventory of Parry

( 125,000 x 20% ) P25,000
Using the same information in previous, the consolidated cost of sales of Parry and subsidiary
for 2012 was:
a. P1,024,000 c. P1,052,800
b. P1,045,000 d. P1,056,000

Parry- Cost of sales 800,000

Starry- Cost of sales 640,000
TOTAL 1,440,000
LESS: Intercompany sales 400,000
Realized profit in beginning inventory of Parry 20,000
ADD: Unrealized profit in ending inventory of Parry 25,000
Consolidated cost of sales 1,045,000
Power co. is a manufacturer and Slack Co., its 100%-owned subsidiary is a retailer. The companies are
vertically integrated. Thus, Slack purchases all of its inventory from power. On Jan. 01,2012 Slack’s
inventory was P30,000. For the year ended Dec.31,2012,its purchases were P150,000, and its cost of
sales was P166,500. Power’s sales to Slack reflect a 50% mark up on cost. Slack then resells the goods to
outside entities at a 100% mark up on cost.

At what amount should the intercompany inventory purchased from Power be reported in the
consolidated balance sheet at December 31,2012?
a. P3,000 c. P13,500
b. P9,000 d. P46,000

Beginning inventory 30,000

ADD: Purchases 150,000
LESS: Cost of sales 166,500
Ending inventory recorded 13,500
DIVIDE: 150%
Ending inventory –Slack 9,000
During 2016, Pepe Corp. sold goods to its 80% owned subsidiary, Sasa Company.
December 31, 2016, one half of these goods were included in Sasa Company’s ending
inventory. Reported 2016 selling expenses were 110,000 and 40,000 for Pepe and Sasa,
respectively. Pepe’s selling expenses included 5,000 in freight-out costs of goods sold to
Sasa.

What amount of selling expenses should be reported in Pepe’s 2016 consolidated

statement of comprehensive income?

Pepe’s Selling expenses P110,000

Sasa’s Selling expenses 40,000
Eliminate freight cost for intercompany sales (5,000)
Consolidated Selling Expenses P145,000
The separate incomes (which do not include investment income) of Pell Corp. and Sell Corp., its 80%
owned subsidiary, for 2016 were determined as follows:
PELL SELL
Sales P400,000 P100,000
Less: COGS 200,000 60,000
Gross Profit 200,000 40,000
Other expenses 100,000 30,000
Separate incomes 100,000 10,000
During 2016, Pell sold merchandise that cost P20,000 to Sell for 40,000, and at December 31, 2016 half of
these inventory items remained unsold by Sell.

The Non-Controlling interest in net income in 2016 is:

Subsidiary Net Income 10,000

Multiply: Non controlling interest 20%
NCI in Net Income 2,000
Using the previous info, the Consolidated Sales for 2016 is:
a. 430,000
b. 450,000
c. 460,000
d. 440,000

Combined Sales (400,000+100,000) 500,000

Less: Intercompany Sales 40,000
CONSOLIDATED SALES 460,000
Using previous info, the Consolidated Cost of Sales for 2016 is:
a. 120,000
b. 130,000
c. 220,000
d. 230,000

Combined Cost of Sales(200,000+60,000) 260,000

Less: Intercompany Purchases 40,000
Add: Unrealized Profit in End Inv. To Sell
(40,000x50% = 20,000/40,000) 10,000
CONSOLIDATED COST of SALES 230,000
The profit attributable to Equity Holders of Parent or CNI Contributable to contolling
interests for 2016:

a. 108,000
b. 100,000
c. 98,000
d. 80,000

Consolidated Sales 460,000

Less: Consolidated COGS (230,000)
Consolidated Gross Profit 230,000
Less: Consolidated Other Exp. (100,000+30,000) (130,000)
100,000
Less: NCI in Net Income (2,000)
Profit Attributable to Equity Holders of Parent 98,000
Pm Company acquired 70% interest in Sp Company in 2014 at a cost equal to its book value.
For the year ended December 31, 2016, PM Company and SP Company reported net income
from there own operations of P120,000 and P90,000 respectively. During 2015, SP sold
merchandise to PM at a profit of P2,000. the merchandise was later resold by PM to outsiders
for P15,000 during 2016. What is the consolidated total comprehensive income attributable to
parent on December 31, 2016?
a. P210,000
b. P182,400
c. P183,000
d. P182,000
Total comprehensive income from own operations:
PM Company 120,000
SP Company 90,000
Total comprehensive income attributable to NCI:
SP net income 90,000
Realized profit in inventory (2,000)
Total 92,000
NCI 30% (27,600)
Consolidated Total comprehensive income attributable to parent 182,400
The next 2 items will be based on the following information

Prid corporation owns an 80% interest in Sed Corp.; and at December 31, 2011, Prid
investment in Sed on a cost basis was equal to 80% of Sed’s stockholders equity. During
2011, Sed sold merchandise to Prid to P100,000 at a gross profit to Sed of P20,000. At
December 31, 2012 half of this merchandise is included in Prid’s inventory. Separate
incomes for Prid and Sed for 2012 are summarized as follows:

Prid Sed
Sales P500,000 P300,000
Cost of Sales (250,000) (200,000)
Gross Profit P250,000 P100,000
Operating Expense (125,000) (40,000)
Separate Income P125,000 P60,000
The consolidated/group cost of sales for 2012 is?
a. P460,000 c. P440,000
b. P450,000 d. P360,000

Combined cost of sales (250,000+200,000) 450,000

Less: intercompany purchases 100,000
Add: unrealized profit in ending inventory of Prid
(100,000x50%= 50,000x20,000/100,000) 10,000
Consolidated cost of sales 360,000
The non-controlling interest in net income for 2012 is?
a. P48,000 c. P12,000
b. P60,000 d. P10,000

Subsidiary net income from own operations 60,000

Less: unrealized profit in ending inventory- Prid 10,000
Sed’s realized net income 50,000
Multiply: NCI % 20%
Non-controlling interest in net income 10,000