Reference no: EM132982311

Questions -

Q1. SLIMY Inc acquires 100% of the voting stock of Moving Co on January 1, 2017 for 400,000 cash. A contingent payment of 16,500 will be paid on April 1, 2018 if Moving generates cash flows from operations of 27,000 or more in the next year. SLIMY estimates that there is a 20% probability that Moving will generate at least 27,000 or more in the next year and uses an interest rate of 5% to incorporate the time value of money. The fair value of 16,500 at 5%, using a probability-weighted approach is 3,142. What will SLIMY record as investment in subsidiary on January 1, 2016?

Q2. ISO Company acquired 80% of the outstanding shares of JOI Company for P450,000; which included a control premium of P25,000, on January 1, 2019 when the net assets of JOI amounted to P400,000. On the date of acquisition JOI Company's net assets had book values equal to their values except for inventory which was understated by P25,000 (20% of the goods were sold in 2020) and an equipment with a remaining 5-year life was understated by P50,000. The non-controlling interest is to be valued at fair value. On December 31, 2021, JOI Company reports capital stock of P200,000, share premium of P200,000 and retained earnings of P300,000. Determine the valuation of the non-controlling interest in the consolidated financial statements on December 31, 2021.