Reference no: EM132978482

Question - On January 1, 2021, ABC purchased 90% of the outstanding shares of PQR by paying P740,000. On that date, PQR had P300,000 capital stock and P500,000 of retained earnings. An undervalued asset attributable to building amounting to P60,000 with a remaining life of 10 years. All other assets and liabilities of PQR had book value approximated their fair market value. On January 1, 2022, ABC's common stock and retained earnings amounted to P1,000,000 and P850,000 respectively, while PQR's retained earnings is P600,000. The 2022 net income and dividends was as follows: ABC Net Income P340,000 and Dividend of P100,000; PQR net income P150,000 and Dividends P50,000. On April 1, 2022, ABC sold machinery with a book value of P30,000 to PQR for P60,000. The machinery is expected to have a remaining useful life of five years from the date of the sale. On December 1, 2022, PQR company sold equipment with a book value at P72,000 to ABC for P60,000. The equipment is expected to last for ten years from the date of sale. Compute the parent's portion of consolidated retained earnings on December 31, 2022.