Reference no: EM133085879

Question - LALA Inc. owns 90% of outstanding stocks of LILI Company purchased at book value. During the year 2016, the following transactions:

-On April 1, 2016, LALA sold equipment, carried in its books at P108,000, to LILI for P120,000 cash. This equipment was acquired by LALA last April 1, 2015 for P120,000.

-On February 28, 2016, LALA Inc. acquired the furniture of LILI Company for P250,000 in cash. This was carried in the books of LILI at P265,000. Useful life of this furniture at the time of sale was five years.

-On November 8, 2016, LILI sold land to LALA which earned it P180,000 gain. The land was reported in the books of LILI at P835,000.

-Net income presented in the books of LALA and LILI amounted to P820,000 and P350,250, respectively.

Required -

For intercompany sale in April, how much will be the adjustment on equipment net account balance in the December 31, 2016 consolidated financial statements? Indicate whether Increase or Decrease.

How much is the adjustment on the furniture net account balance in the December 31, 2016 consolidated financial statements? Indicate whether Increase or Decrease.