Reference no: EM132973301
Questions -
Q1. On July 1, 2016 BD Company purchased 80% of the outstanding shares of SMCompany at a cost of P1,600,000. On that date, SMhad P1,000,000 of capital stock and P1,400,000 of retained earnings. For 2016, BD had income of P560,000 from its separate operations and paid dividends of P300,000. For 2016, SMreported income of P130,000 and paid dividends of P60,000. All the assets and liabilities of SMhave book values equal to their respective fair BUFFet values. Assume income was earned evenly throughout the year except for the intercompany transaction on October 1. On October 1, BD purchased an equipment from SMfor P200,000. The book value of the equipment on that date was P240,000. The loss of P40,000 is reflected in the income of SMindicated above. The equipment is expected to have a useful life of 5 years from the date of sale.
In the December 31, 2014 consolidated statement of financial position, how much is the consolidated net income attributable to the parent company?
Q2. MANIFEST Company, a small-medium enterprise acquires the net assets of BOY Company, a small-medium enterprise paying P2,000,000 and incurring a loan 2,000,000. The loan is to be paid in 5 years paying annual interest of 10%. On the date of acquisition BOY Company reports net assets of P4,500,000 and liabilities of P1,500,000. On the date of acquisition BOY's non-cash assets approximated their fair values except for equipment which was understated by P20,000. MANIFEST incurred the following expenses, Direct costs related to the acquisition of P30,000 and indirect costs of P20,000. Only 80% of the total costs had been paid MANIFEST.
Determine the increase in the total assets of MANIFEST Company as a result of the business combination.
Q3. TWINKLE Company own 90% of the outstanding shares of Lord Company and 80% of the outstanding shares of Gen Company. The companies sell goods to each other. For the current year, TWINKLE sold goods to Gen for P250,000 at a 40% BUFF-up. Gen sold 70% of the goods to Lord for P250,000. Lord in turn sold 65% of the goods to outside parties for P300,000.
A. Determine the consolidated cost of sales.
B. Determine the consolidated gross profit.
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