Reference no: EM132685450
Problem 1 - On January 5, 2008, Grace Co. purchased 70% of the outstanding shares of Leo Co. at a cost of P500,000. On that date, the outstanding ordinary shares of Leo had a P700,000 balance, while accumulated profits had a P100,000 balance. All the book values of assets and liabilities of Leo approximated their fair values except for an equipment which was understated by P50,000.
For the year 2008, Grace sold an equipment to Leo reporting a gain on sale of P25,000 on July 1, 2008 and Leo on the other hand sold a machine to Grace reporting a loss of P10,000 on October 1, 2008. Grace reported net income of P250,000 and declared dividends of P40,000 and reported an accumulated profits balance as of December 31, 2008 of P350,000. Leo reported net income for the year of P150,000 and declared dividends of P20,000. The remaining useful lives of the plant assets as of January 1, 2008 for both companies are 4 years for machinery and 5 years for equipment.
Required - From the above data, determine:
1. The net income attributable to equity holders of the parent for 2008.
2. The non-controlling interest net income in Leo Co. for 2008.
3. The consolidated net income of Grace Co. for 2008.
4. The consolidated accumulated profits as of December 31, 2008.
Problem 2 - On January 1, 2008, Bacil Company purchased 80 percent of the outstanding shares of Lou Company at a cost of P910,000. On that date, Lou Company had P390,000 worth of outstanding shares and P650,000 worth of accumulated profits. For 2008, Bacil Company had income of P390,000 from its own operations and paid dividends of P130,000. For 2008, Lou Company reported a net income of P195,000 and paid dividends of P65,000. All of the assets and liabilities of Lou Company had book values approximately equal to their respective market values. On April 1, 2008, Lou Company sold equipment with a book value of P39,000 to Bacil Company for P78,000. The gain on the sale is included in the income of Lou Company indicated above. The equipment is expected to have a useful life of five years from the date of sale.
Required -
1. Compute the consolidated net income for 2008.
2. Compute the net income attributable to equity holders of the parent.
3. Compute the Non-controlling interest in Net Income of Subsidiary for 2008.
4. Compute the Non-controlling interest in Net Assets of Subsidiary on December 31, 2008.