Consolidation

1. At the date of acquisition 44,197

2. Subsequent to date of acquisition 44,561

At the date of acquisition - Jan 1

EE1 Capital stock - Acquiree Investment in Sub

Share premium - Acquiree Cash
Retained earnings - Acquiuree
Investment in Subsidiary

EE2 Inventory 20,000

Equipment 100,000
Goodwill
NCI
Investment in subsidiary

Subsequent to date of acquisition - Dec 31

EE3 Cost of Goods Sold 20,000

Inventory 20,000

Dep Exp 10,000

Equipment 10,000

Problem: On January 1, Robredo Company acquires 60% of the outstanding common stock of Marcos company
for P1,220,000. On January 1, the financial statement of Marcos Company prior to acquisition
are as follows:
MARCOS
CA FV
Cash 600,000 600,000
Inventory 400,000 500,000 100,000
Equipment 800,000 900,000 100,000
Other Assets 200,000 200,000
2,000,000 2,200,000
AP 300,000 500,000 200,000
Capital stock 600,000 600,000
Retained earnings 1,100,000 1,100,000
2,000,000 2,200,000

On December 31, the following separate financial statements of Roberdo Company and
Marcos Company are as follows
EE
 ROBREDO MARCOS Ref DR CR
Income 1,200,000 1,100,000
Expenses 700,000 900,000 EE3 100,000
EE3 20,000
Net income 500,000 200,000

Cash 500,000 700,000

Inventory 300,000 600,000 EE2 100,000
EE3 100,000
Equipment 600,000 900,000 EE2 100,000
EE3 20,000
Investment in Sub 1,220,000 EE1 1,020,000
EE2 200,000
Goodwill EE2 200,000
Other Assets 400,000 200,000
Total assets 3,020,000 2,400,000

AP 1,200,000 500,000 EE2 200,000

Capital stock 1,000,000 600,000 EE1 600,000
Retained earnings 820,000 1,300,000 EE1 1,100,000
EE4 32,000

NCI EE1 680,000

EE4 32,000

3,020,000 2,400,000 2,252,000 2,252,000

Dec 31
EE1 Capital stock - Marcos 600,000
Retained Earnings - Marcos 1,100,000
Investment in subsidiary 1,020,000
NCI 680,000

Inventory 100,000
EE2 Equipment 100,000
Goodwill 200,000
AP 200,000
Investment in subsidiary 200,000

Cost of Goods Sold - Marcos 100,000

EE3 Operating Expense - Dep 20,000
Inventory 100,000
 Equipment 20,000

EE$ NCI on CI - Marcos 32,000

NCI 32,000

Net income - Marcos 200,000

Less : Adj
Cost of goods sold (100,000)
Operating exp - dep (20,000)
Adjusted net incone - Marcos 80,000

NCI (40%) - Marcos 32,000

Parent 60%) -Robredo 48,000 16,000
80,000

Computation of Goodwill

Consideration given 80,000

NCI 20,000
100,000
FV of Net assets 90,000
Goodwill 10,000

Eliminating Entries

EE1 Share capital - XYZ 50,000

Retained earnings - XYZ, Jan 1 24,000 Other assets
Investment in subsidiary 74,000 Investment in sub

EE2 Equipment 16,000 Equipment

Goodwill 10,000
NCI 20,000 Goodwill
Investment in subsidiary 6,000
Total liabilities
EE3 Expense 4,000 Share capital
Equipment 4,000 Retained earnings
NCI on CI

Fair value 76,000 NCI

Carrying amount 60,000
16,000
 Divided by remaining useful life 4
4,000 Income
Expenses
EE4 NCI on CI 5,200 Profit for the year
NCI 5,200

Net Income 30,000

Less: adjusment (EE3) (4,000)
Adjusted net income -XYZ 26,000
NCI share - XYZ (20%) 5,200
Parent share -ABC (80%) 20,800

Problem 6 - p 183 Problem 6 p 184

Consideration 360,000 Consideration

NCI 240,000 NCI (20% of P400,000)
600,000
FV of net assets 310,000 FV of net assets - Winds
Goodwill 290,000 Goodwill

Taxi's net asset at CA 348,000

Taxi's net assets at FV 310,000 Strings
38,000 Winds
Goodwill
Other assets -Taxi 444,000 Consolidated assets
Less: decrease in FV (38,000)
Goodwill 290,000
Other assets - Jeep Co 1,296,000 Equity:
Consolidated total assets 1,992,000 Strings Co
Ordinary share
Retained earnings

Winds
NCI

Problem 4 p 185

Consideration 300,000 Carrying amount

NCI (20% x P360,000) 72,000 Differenec:
372,000 Inventory
FV of net assets 360,000 Equipment
12,000 Adjusted FV of net assets
NCI FV at acquisition date 72,000 Net income
Share in the net income 8,000 Less: Inventory
80,000 Equipment

20%
nvestment in Sub Consideration
NCI

FV of Net Assets

CA FV Diff
Inventory 100,000 120,000 20,000

Dec 31
Beg Inv, Jan 100,000 120,000
Purchases 50,000 50,000
GAFS 150,000 170,000
End, Dec31 60,000 60,000
90,000 110,000

Equipment 600,000 700,000 100,000

The ramaining life is 10 yrs

Dep Exp 60,000 70,000 10,000

of Marcos company
o acquisition

Consideration 1,220,000
NCI (1,900,000 x 40%) 680,000
1,900,000
FV of net assets 1,700,000
200,000

NCI is valued of proportionate share

The equipment has remaining life of 5 yrs
CONS
2,300,000 Own income - Robredo 500,000
1,720,000

580,000

1,200,000

900,000

1,580,000

-
200,000
600,000
4,480,000

1,900,000
1,000,000
1,020,000 Retained Earnings 820,000
32,000 Add: Share in the NI of Marcos 48,000
16,000 868,000
(200,000)

NCI
712,000 Proportionate share 680,000
Add: Share in CI 32,000
4,480,000 712,000

Own income - Robredo 500,000

Add: Share in Marcos income 48,000
Net income attributable to parent - Rober 548,000
Add: NCI 32,000
Consolidated Income 580,000

ROBREDO COMPANY
Consolidated Statement of Financial Position
As of December 31, 2021

Cash 1,200,000
Inventory 900,000
Equipment, net 1,580,000
Goodwill 200,000
 Other Assets 600,000
Total assets 4,480,000

Accounts payable 1,900,000

Capital Stock 1,000,000
Retained earnings 868,000
NCI 712,000
Total liabilities and equity 4,480,000

ROBREDO COMPANY
Consolidated Statement of Comprehensive Income
For the year ended, December 31, 2021

Income 2,300,000
Expenses (1,720,000)
580,000
Less: Attributable to NCI 32,000
Net income attributable to parent - Robre 548,000

EE
ABC XYZ DR CR Cons
178,000 44,000 222,000
80,000 - EE1 74,000 -
EE2 6,000
160,000 90,000 EE2 16,000
EE3 4,000 262,000
EE2 10,000 10,000
418,000 134,000 494,000
73,000 30,000 103,000
235,000 50,000 EE1 50,000 235,000
110,000 54,000 EE1 24,000 140,000
EE4 5,200 (30,000)
20,800 130,800
EE2 20,000
5,200 25,200
494,000
 300,000 130,000 430,000
240,000 100,000 EE3 4,000 344,000
60,000 30,000 86,000

109,200 109,200

430,000 Other assets 800,000

80,000 Liabilities (400,000)
510,000 FV of net assets -Winds 400,000
400,000
110,000

1,570,000
800,000
110,000
2,480,000

1,000,000
ed earnings 250,000
1,250,000

80,000

296,000

32,000
32,000 4 8,000 72,000
f net assets 360,000
32,000
(8,000)
 80,000 24,000
(32,000) 8,000
(8,000) 32,000
40,000
8,000
1,900,000
PROBLEM 6 - COMPUTATIONAL
pages 183 - 188

Consideration given 360,000

NCI 240,000
600,000 Consideration given
FV of NIA 310,000 NCI
Goodwill 290,000
1)
Add: Other assets - Jeep Co 1,296,000 FV of NIA - Pirated Co:
Add: Other assets - Taxi Co 444,000 Share capital
13)
Less: Decrease in FV(348k - 310k) (38,000) 406,000 Retained earnings - Ja
Consolidated total assets 1,992,000
ANSWER : B Add: Increase in FV
Consideraton given 430,000 Inventories
NCI Equipment
Net Assets - Winds Co 350,000 Goodwill
Increase in FV of assets 50,000 ANSWER : B
400,000 Total assets - Original C
Proportionate share 20% 80,000 Less: Consideration give
2) 510,000 Total assets - Original Co
FV of of NIA 400,000 Pirated Co - NCI
Goodwill 110,000
Add: Other assets - Strings Co 1,570,000
Other assets - Winds Co. (750k+50k) 800,000 14)
Consolidated total assets 2,480,000
ANSWER: B
Ordinary share capital - Strings 1,000,000
Retained earnings - Strings 250,000 Goodwill
Equity - Parent 1,250,000 Consolidated total asset
3)
NCI - Winds Co 80,000 ANSWER: C
ANSWER: B NCI - January 1
Add: Share in the Net in
Jan 1 Dec 31 Net increase
Total Equity - Circle Co 296,000 376,000
Add: Increase in FV:
Inventory 32,000
15)
Equipment 32,000
4)
360,000 376,000
Less: Equipment 32,000
Less: Depr 8,000 24,000
360,000 400,000 40,000
ANSWER: D ANSWER: A
Consideraton given 300,000 Share capital - Original C
NCI (20% x 360,000) 72,000 Retained earnings - Orig

5)
16)
 372,000 Share in the adjusted in
5)
FV of NIA 360,000 16)
Goodwill 12,000
ANSWER: A Equity attributable to p
Parent NCI ANSWER: A
Consideraton given 300,000 300,000 Cost of Sales - Orignial C
NCI (20% x 360,000) 72,000 72,000 Cost of Sales - Pirated C
372,000 Adjustments
17)
FV of NIA 360,000 288,000 72,000 Decrease in FV of in
6)
Goodwill 12,000 12,000 - Consolidated cost of sal
ANSWER : B
All the goodwill is attributable to Parent only since NCI is valued at Operating expenses - Or
proportionate share. Operating expenses - Pi
ANSWER : D 18) Depreciation of incre
SQURE CO: Consolidated operating
Total assets (excluding investment in sub) 1,372,000 ANSWER: A
CIRCLE CO: Profit - Original Co
Total assets 496,000 Adjusted net profit -Pira
19)
Add: Increase in FV of Eqpt: 32,000 Consolidated profit
7)
Less: Depr(32k/4yrs) 8,000 24,000 520,000 ANSWER : A
1,892,000 Profit - Original Co
Goodwill 12,000 Adjusted net profit -Pira
Consolidated total assets 1,904,000 Share
20)
ANSWER: C Consolidated profit attri
NCI - acquisition date (Jan 1) 72,000 NCI
Add: Share in Net income: ANSWER: D
Unadjusted net income - Circle 80,000
Adjustments in FV:
Inventory (32,000)
8)
Eqpt - Depreciation (8,000)
Adjusted Net Income - Circle 40,000
NCI (Circle) share 20% 8,000
Non controlling interest - Dec 31 80,000
ANSWER: B
Retained Earnings - Square Co (Own) 440,000
Add: Share in adjusted NI of Circle
Adjusted NI - Circle 40,000
9)
Share 80% 32,000
Consolidated retained earnings 472,000
ANSWER: C
SQUARE CO:
Share Capital 940,000
Retained earnings 440,000
10) Share in NCI(Circle) income 32,000
10)
Total 1,412,000
CIRCLE CO: - NCI 80,000
ANSWER: C
SQUARE CO:
Net profit - own 600,000
Share in NCI - Circle profit 32,000
11) Total 632,000
CIRCLE CO - NCI 8,000
Consolidated Profit 640,000
ANSWER: C
Attributable to Parent - Square Co 632,000
12) Attributable to NCI - Circle Co 8,000
ANSWER: B
 Goodwill
Parent NCI
Consideration given 360,000 360,000
240,000 240,000
600,000
FV of NIA - Pirated Co:
Share capital 300,000
Retained earnings - Jan 1 48,000
348,000
Add: Increase in FV: CA FV
Inventories 144,000 96,000 (48,000) 60% 186,000
Equipment 240,000 250,000 10,000 310,000 40% 124,000
290,000 174,000 116,000
ANSWER : B
Total assets - Original Co: 1,550,000
Less: Consideration given (360,000)
Total assets - Original Co 1,190,000
Pirated Co - NCI
Total assets 550,000
Add: Equipment:
FV 250,000
Carrying amount 240,000
Increase 10,000
Depreciation (10k/8yrs) (1,250) 8,750 558,750
290,000
Consolidated total assets - December 31 2,038,750
ANSWER: C
NCI - January 1 240,000
Add: Share in the Net income of Pirtated Co:
Unadjusted Net income 70,000
Adjustments:
Decrease in inventory charged to CGS 48,000
Depreciation of increase in equipmment:
(10,000/8yrs) (1,250)
Adjusted Net income 116,750
NCI share 40% 46,700
NCI net assets - Dec 31 286,700

ANSWER: A
Share capital - Original Co 1,200,000
Retained earnings - Original Co 316,000
Share in the adjusted income of Pirated Co:
Adjusted net income 116,750
Share 60% 70,050
Equity attributable to parent 1,586,050
ANSWER: A
Cost of Sales - Orignial Co 200,000
Cost of Sales - Pirated Co: 80,000
Adjustments
Decrease in FV of inventory (48,000) 32,000
Consolidated cost of sales 232,000
ANSWER : B
Operating expenses - Original Co 400,000
Operating expenses - Pirated Co 200,000
Depreciation of increase in equipmment: 1,250 201,250
Consolidated operating expenses 601,250
ANSWER: A
Profit - Original Co 100,000
Adjusted net profit -Pirated Co 116,750
Consolidated profit 216,750
ANSWER : A
Profit - Original Co 100,000
Adjusted net profit -Pirated Co 116,750
60% 70,050
Consolidated profit attributable to parent 170,050
46,700
ANSWER: D