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    Quiz - Consolidated FS Part 2

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    skyie
    1. ABC Co acquired 80% interest in XYZ Inc by issuing shares. XYZ's assets and liabilities were remeasured at fair value on acquisition date. 2. ABC and XYZ's individual financial statements for year-end 20x1 are presented showing their separate assets, liabilities, equity, revenues and expenses. 3. The document poses two cases asking for the calculation of consolidated profit, assets and equity for 20x1 treating the non-controlling interest differently.

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    Quiz - Consolidated FS Part 2

    Uploaded by

    skyie
    74 views3 pages
    1. ABC Co acquired 80% interest in XYZ Inc by issuing shares. XYZ's assets and liabilities were remeasured at fair value on acquisition date. 2. ABC and XYZ's individual financial statements for year-end 20x1 are presented showing their separate assets, liabilities, equity, revenues and expenses. 3. The document poses two cases asking for the calculation of consolidated profit, assets and equity for 20x1 treating the non-controlling interest differently.

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    1. ABC Co acquired 80% interest in XYZ Inc by issuing shares. XYZ's assets and liabilities were remeasured at fair value on acquisition date. 2. ABC and XYZ's individual financial statements for year-end 20x1 are presented showing their separate assets, liabilities, equity, revenues and expenses. 3. The document poses two cases asking for the calculation of consolidated profit, assets and equity for 20x1 treating the non-controlling interest differently.

    Copyright:

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

    Quiz - Consolidated FS Part 2

    Uploaded by

    skyie
    1. ABC Co acquired 80% interest in XYZ Inc by issuing shares. XYZ's assets and liabilities were remeasured at fair value on acquisition date. 2. ABC and XYZ's individual financial statements for year-end 20x1 are presented showing their separate assets, liabilities, equity, revenues and expenses. 3. The document poses two cases asking for the calculation of consolidated profit, assets and equity for 20x1 treating the non-controlling interest differently.

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    © All Rights Reserved
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    COLLEGE OF ACCOUNTANCY AND BUSINESS ADMINISTRATION

    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.

    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:
    XYZ, Inc. Carrying amounts Fair values Fair value 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 depreciation (40,000) (48,000) (8,000)
    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 goodwill is impaired by ₱4,000.

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

    FINANCIAL ACCOUNTING AND REPORTING 1


    COLLEGE OF ACCOUNTANCY AND BUSINESS ADMINISTRATION

    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

    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?


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

    FINANCIAL ACCOUNTING AND REPORTING 2


    COLLEGE OF ACCOUNTANCY AND BUSINESS ADMINISTRATION

    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?


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

    FINANCIAL ACCOUNTING AND REPORTING 3

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