Reference no: EM132980989
Questions -
Q1. MARY Company acquired 80% of the outstanding shares of MAMA Company for P800,000 on January 1, 2019. On this date, MAMA reports capital stock of P300,000, Share Premium of P350,000 and Retained Earnings of P200,000. Moreover, an examination of MAMA's net assets revealed that their book values were equal to their fair values except for Inventory which was understated by P50,000, Equipment with a 5-year remaining life was overstated by P75,000, Building with a 10-year life was understated by P100,000 and Land was understated by P20,000. The non-controlling interest is stated at fair value. MARY Company pays P20,000 direct acquisition costs related to the acquisition and P15,000 indirect costs. P5,000 direct costs and P20,000 indirect costs however, remain unpaid.
A. If MARY and MAMA Company are not small-medium enterprises and MAMA Company reports Stockholders Equity of P1,200,000 on December 31, 2022, determine the Non-Controlling Interest on December 31, 2022.
B. If MARY and MAMA Company are small-medium enterprises and report net income of P400,000 and P200,000 each in 2019, determine the non-controlling interest net income to be reported in 2019.
Q2. In October 2018, LUIGI Co obtained a loan amounting to US$120,000 for the purchase of machinery and equipment. By the end of year, one-half of the loan was still unpaid and the peso weakened by ten percent. If the foreign loan payment account is correctly reported in the balance sheet at P1,848,000. Determine the peso equivalent of the peso to the US$ at the date of the transaction.
Q3. On December 23, 2018, the liaison officer of IDGAF Co was given an P18,000 travel advance for a 10-day trip to Hong Kong. On that day, the amount was converted into 36,000 Hong Kong dollars (HK$). During the 10-day trip, the HK$ steadily weakened against the peso. The exchange rate at December 31, 2018 was HK$1 equals P.48. On January 5, 2019, the liaison officer returned and submitted to the company cashier HK$3,300 and receipts for HK$32,700 baht that he spent. On this date, the exchange rate was HK$1 equals P.42. Of the HK$32,700 spent during the trip, HK$17,100 had been spent by December 31, 2019. Determine the foreign exchange gain or loss on December 31, 2018.