Reference no: EM132977849

Question: Bradley Company bought 50.10% of the outstanding common shares of Geer Company for cash worth P73,024.94 and Bradley Company common shares. On this date, Bradley Company common shares have a market value of P65.66 a share respectively. Geer Company common shares drop to P33.02 per share right after the acquisition. On this date (January 1 2009), Geer Company's stockholders' equity consisted of the following:

Share Capital (par 25) 1,109,010.00
Share Premium 772,909.60
Retained Earnings 516,157.88

The book values of , Geer Company's assets and liabilities approximate fair value except for the following:

Book Value Fair Value Notes
Current Assets 1,441,280.47 1,830,814.56 The excess was due to inventory with book value of
P100,000. Half was sold in 2010, the rest were deemed
obsolete by 2011 and was written off

Plant Assets 7,887,240.59 6,898,896.74 The excess was due to two assets:
Equiipment with excess of P200,000. It was depreciated using
the straightline method for 8 years. Depreciation was always
charged to Operating Expenses.

Land had an excess of P250,000. The land was subsequently sold to a 3rd party company during 2011.

You noted the following details:
1. On January 31 2009, Geer Company sold inventory to Bradley Company. The cost of inventory is P250,000 on a gross margin on cost of 25%.
10% remains in ending inventory. All remaining inventory were sold to 3rd parties by 2010.

2. On June 30 2009, Geer Company bought 2,000, P1,000 face value bonds of Peach from the open market at a yield of 10%.

The bonds were initially issued at 12% on January 1, 2009. It pays semiannual coupons pegged at 11%. for the next four years every June 30 and December 31. Geer Company intends to hold the investment to maturity

3. On December 31, 2010, Bradley Company sold two pieces of equipment to Geer Company with a combined purchase cost of P750,000 for P300,000. It was originally depreciated over 8 years when it was bought on June 30, 2005. Geer Company estimates useful life of 5 years from December 31, 2009.

4. During 2010, Bradley Company sold inventory to Geer Company. The intercompany sales were P400,000 on a gross margin of 40%. Only 40% were sold. Three-fourhts of the remaining inventory was sold in 2011. The rest were sold in 2012.

5. During 2010, Geer Company sold inventory to Bradley Company. The intercompany sales were P200,000 on a gross margin on cost of 25%. Only 75% were sold. The rest were sold in 2011.

The following shos the financial statements of Bradley Company and Geer Company as of/for the period ending December 31, 2011.

What is the Consolidated Financial Statements (except for cash flows) as of/for the period ending December 31, 2011.

Bradley Company Geer Company
Sales (2,486,446.32) (1,978,779.97)
CGS 946,171.97 912,259.36
Opex 286,180.54 137,665.21
Int Exp, net 51,195.18 29,811.71
Other exp, net 379,759.13 255,000.00
Net Income (823,139.50) (644,043.69)

STATEMENT OF RETAINED EARNINGS
Beg RE (929,492.74) (1,001,754.96)
Net Income (823,139.50) (644,043.69)
Dividends 112,700.38 45,193.68
End RE (1,639,931.86) (1,600,604.97)

Beg NCI
Net Income
Dividends
End NCI

BALANCE SHEET
Current Assets 1,998,293.52 1,276,872.50
PPE 5,977,272.98 5,158,522.79
Inv in Sub 1,710,019.95 -
Other Assets 1,228,980.42 2,396,954.01
GW
Total 10,914,566.88 8,832,349.31

Current Liab (875,004.08) (1,107,830.68)
Bonds Payable (5,000,185.75) (2,217,409.60)
Other NCL (404,584.84) (2,447,795.63)
Share Capital (1,816,590.25) (1,109,010.00)
Share Premium (1,399,067.35) (772,909.60)
UGL (274,159.75) (100,000.00)
RE (1,144,974.87) (1,077,393.80)
NCI
Total (10,914,566.88) (8,832,349.31)