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    Buscom Discussion

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    Lorie Grace Laguna
    1. ABC Co. acquired 80% interest in XYZ, Inc. on January 1, 20x1. 2. The consolidated profit for 20x1 is ₱296,000 when the non-controlling interest is measured using the proportionate share method. 3. The consolidated total assets as of December 31, 20x1 is ₱1,900,000 and the consolidated total equity is ₱1,488,000.

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    Buscom Discussion

    Uploaded by

    Lorie Grace Laguna
    249 views3 pages
    1. ABC Co. acquired 80% interest in XYZ, Inc. on January 1, 20x1. 2. The consolidated profit for 20x1 is ₱296,000 when the non-controlling interest is measured using the proportionate share method. 3. The consolidated total assets as of December 31, 20x1 is ₱1,900,000 and the consolidated total equity is ₱1,488,000.

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    1. ABC Co. acquired 80% interest in XYZ, Inc. on January 1, 20x1. 2. The consolidated profit for 20x1 is ₱296,000 when the non-controlling interest is measured using the proportionate share method. 3. The consolidated total assets as of December 31, 20x1 is ₱1,900,000 and the consolidated total equity is ₱1,488,000.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    249 views3 pages

    Buscom Discussion

    Uploaded by

    Lorie Grace Laguna
    1. ABC Co. acquired 80% interest in XYZ, Inc. on January 1, 20x1. 2. The consolidated profit for 20x1 is ₱296,000 when the non-controlling interest is measured using the proportionate share method. 3. The consolidated total assets as of December 31, 20x1 is ₱1,900,000 and the consolidated total equity is ₱1,488,000.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    UM Tagum College

    Arellano Street, Tagum City, 8100 Philippines

    Business Combination; Consolidated & Separate FS PROF. JON D. INOCENTES,CPA


    LECTURE

    Consolidation subsequent to date of acquisition (Proportionate share)


    On January 1, 20x1, ABC Co. acquired 80% interest in XYZ, Inc. by issuing 5,000 shares with fair value of ₱60
    per share and par value of ₱40 per share. On acquisition date, ABC Co. elected to measure non-controlling
    interest as its proportionate share in XYZ, Inc.’s net identifiable assets.

    XYZ’s shareholders’ equity as of January 1, 20x1 comprises the following:


    (at carrying amounts)
    Share capital 200,000
    Retained
    earnings 96,000
    Total equity 296,000

    On January 1, 20x1, the fair values of the assets and liabilities of XYZ, Inc. were determined by appraisal, as
    follows:

    Carrying Fair Fair value


    XYZ, Inc.
    amounts values increment
    Cash 20,000 20,000 -
    Accounts receivable 48,000 48,000 -
    Inventory 92,000 124,000 32,000
    Equipment 200,000 240,000 40,000
    Accumulated
    (40,000) (48,000) (8,000)
    depreciation
    Accounts payable (24,000) (24,000) -
    Net assets 296,000 360,000 64,000

    The remaining useful life of the equipment is 4 years.

    During 20x1, no dividends were declared by either ABC or XYZ. There were also no inter-company
    transactions. The group determined that there is no goodwill impairment.

    ABC’s and XYZ’s individual financial statements at year-end are shown below:

    Statements of financial position


    As at December 31, 20x1
    ABC Co. XYZ, Inc.
    ASSETS
    Cash 92,000 228,000
    Accounts receivable 300,000 88,000
    Inventory 420,000 60,000
    Investment in subsidiary 300,000 -
    Equipment 800,000 200,000
    Accumulated depreciation (240,000) (80,000)
    TOTAL ASSETS 1,672,000 496,000
    LIABILITIES AND EQUITY
    Accounts payable 172,000 120,000
    Bonds payable 120,000 -
    Total liabilities 292,000 120,000
    Share capital 680,000 200,000
    Share premium 260,000 -
    Retained earnings 440,000 176,000
    Total equity 1,380,000 376,000
    TOTAL LIABILITIES AND EQUITY 1,672,000 496,000

    Statements of profit or loss


    For the year ended December 31, 20x1
    ABC Co. XYZ, Inc.
    Sales 1,200,000 480,000
    Cost of goods sold (660,000) (288,000)
    Gross profit 540,000 192,000
    Depreciation expense (160,000) (40,000)
    Distribution costs (128,000) (72,000)
    Interest expense (12,000) -
    Profit for the year 240,000 80,000

    1. How much is the consolidated profit for 20x1?


    a. 208,000 b. 280,000 c. 240,000 d. 296,000

    2. How much is the consolidated total assets as of December 31, 20x1?


    a. 1,867,000 b. 1,907,000 c. 1,894,000 d. 1,904,000

    3. How much is the consolidated total equity as of December 31, 20x1?


    a. 1,492,000 b. 1,415,000 c. 1,412,000 d. 1,421,000

    Consolidation subsequent to date of acquisition – NCI at Fair value


    4. How much is the consolidated profit for 20x1?
    a. 208,000 b. 280,000 c. 240,000 d. 296,000

    5. How much is the consolidated total assets as of December 31, 20x1?


    a. 1,867,000 b. 1,907,000 c. 1,894,000 d. 1,904,000

    6. How much is the consolidated total equity as of December 31, 20x1?


    a. 1,492,000 b. 1,415,000 c. 1,412,000 d. 1,495,000

    Impairment of goodwill

    The group determined that goodwill is impaired by ₱4,000.

    Case #1: On acquisition date, ABC Co. elected to measure non-controlling interest as its proportionate share in
    XYZ, Inc.’s net identifiable assets.
    1. How much is the consolidated profit for 20x1?
    a. 296,000 b. 280,000 c. 208,000 d. 276,000
    2. How much is the consolidated total assets as of December 31, 20x1?
    a. 1,900,000 b. 1,907,000 c. 1,903,000 d. 1,904,000

    3. How much is the consolidated total equity as of December 31, 20x1?


    a. 1,492,000 b. 1,415,000 c. 1,488,000 d. 1,491,000

    Case #2:
    On acquisition date, ABC Co. elected to measure non-controlling interest at fair value. A value of ₱75,000 is
    assigned to the non-controlling interest.
    4. How much is the consolidated profit for 20x1?
    a. 296,000 b. 280,000 c. 278,000 d. 276,000

    5. How much is the consolidated total assets as of December 31, 20x1?


    a. 1,900,000 b. 1,907,000 c. 1,903,000 d. 1,904,000

    6. How much is the consolidated total equity as of December 31, 20x1?


    a. 1,492,000 b. 1,415,000 c. 1,488,000 d. 1,491,000

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