Reference no: EM133108259
Question 1 - Colton Company acquired 80 percent ownership of Mota Company's voting shares on January 1, 2022. Any excess of the price paid over book value is attributable to building ( 5 -year remaining life), whose net book value and fair value are P40,000 and P60,000, respectively.
During 2022, Colton purchased inventory for P 30,000 and sold the full amount to Mota Company for P 50,000. On December 31, 2022, Mota's ending inventory included P10,000 of items purchased from Colton. Also in 2022, Mota purchased inventory for P80,000 and sold the units to Colton for P100,000. Colton included P30,000 of its purchase from Mota in ending inventory on December 31, 2022.
Summary income statement data for the two companies revealed the following:
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Colton Company
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Mota Company
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Sales
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P300,000
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P172,000
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Cost of Sales
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(190,000)
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(110,000)
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Other Expenses
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(45,000)
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(29,000)
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P65,000
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P33,000
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Required -
1. Compute the amount to be reported as cost of goods sold in the 2022 consolidated income statement.
2. What amount of income will be assigned to the noncontrolling shareholders in the 2022 consolidated income statement?
Question 2 - On January 1, 2022, Pink Corporation purchased 80% of Soda Company's outstanding stock for P 1,240,000. At that date, all of Soda's assets and liabilities had market values approximately equal to their book values and no goodwill was included in the purchase price. The following information was available for 2023:
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Pink
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Soda
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Income from own operations
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P300,000
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Operating loss
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P40,000
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Dividends paid in 2023
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150,000
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30,000
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On July 1, 2022, Pink Corporation sold a machine to Soda Company at a gain of P50,000. The machine is expected to have a remaining useful life of 10 year from the date of sale. This machine was sold to unrelated party on December 31, 2023 at a gain of P 10,000.
Also, on January 1, 2023, Soda Company sold a truck to Pink Corporation at a loss of P 15,000. The truck is expected to have a useful life of 5 years from the date of sale.
Required -
1. Determine the consolidated net income for 2023?
2. Determine the non-controlling interest income for 2023?
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