Reference no: EM132973609

Question: Sancus Co. bought 64.69% of the outstanding common shares of Consus
Inc. for cash worth P83,137.31 and
Sancus Co. common shares. On this date, Sancus Co. common shares have a market value of P69.46 a share respectively. Consus Inc.
common shares drop to P47.39 per share right after the acquisition. On this date (January 1 2009), Consus Inc.'s stockholders' equity consisted of the following:

Share Capital (par 25) 1,009,761.00
Share Premium 976,680.16
Retained Earnings 438,815.24

The book values of , Consus Inc.'s assets and liabilities approximate fair value except for the following:

Book Value Fair Value Notes
Current Assets 1,238,604.61 1,280,556.78 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 6,983,258.37 7,312,296.73 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, Consus Inc. sold inventory to Sancus Co.. 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, Consus Inc. 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. Consus Inc. intends to hold the investment to maturity

3. On December 31, 2010, Sancus Co. sold two pieces of equipment to Consus Inc. 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. Consus Inc. estimates useful life of 5 years from December 31, 2009.

4. During 2010, Sancus Co. sold inventory to Consus Inc.. 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, Consus Inc. sold inventory to Sancus Co.. 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 Sancus Co. and Consus Inc. 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.

Sancus Co. Consus Inc.
Sales (2,205,323.06) (1,861,988.69)
CGS 875,391.59 768,198.88
Opex 213,003.65 132,356.58
Int Exp, net 60,434.66 35,710.28
Other exp, net 382,663.16 255,000.00
Net Income (673,830.01) (670,722.95)

STATEMENT OF RETAINED EARNINGS
Beg RE (999,442.56) (717,108.68)
Net Income (673,830.01) (670,722.95)
Dividends 85,535.74 35,249.61
End RE (1,587,736.84) (1,352,582.01)

Beg NCI
Net Income
Dividends
End NCI

BALANCE SHEET
Current Assets 1,609,725.22 1,545,027.18
PPE 5,785,850.95 4,995,012.94
Inv in Sub 1,007,007.41 -
Other Assets 1,334,769.47 2,815,729.82
GW
Total 9,737,353.05 9,355,769.94

Current Liab (673,307.77) (1,448,622.51)
Bonds Payable (3,613,801.74) (2,601,671.79)
Other NCL (566,296.57) (1,723,081.82)
Share Capital (1,473,267.80) (1,009,761.00)
Share Premium (1,492,461.62) (976,680.16)
UGL (246,482.41) (100,000.00)
RE (1,671,735.13) (1,495,952.66)
NCI
Total (9,737,353.05) (9,355,769.94)