Reference no: EM133027064

Question - Green Company reported the following liabilities on December 31, 2021.

Accounts payable 2,000,000

Short-term borrowings 1,500,000

Bonds payable due December 31, 2022 3,000,000

Premium on bonds payable 500,000

Mortgage payable, current portion P500,000 3,500,000

Bank loan, due June 30, 2022 1,000,000

The P1,000,000 bank loan was refinanced with a 5-year loan on March 1, 2022. The financial statements were issued March 31, 2022.

Orange Company is completing the preparation of the financial statements for 2021. The financial statements are authorized for issue on March 31, 2022. On March 5, 2022, a dividend of P3,000,000 was declared and a contractual profit share payment of P1,000,000 was made based on the net income for 2021. On February 1, 2022, a customer went into liquidation having owed the entity P500,000. No allowance had been made against this account. On March 20, 2022, a manufacturing plant was destroyed by fire resulting in a financial loss of P2,500,000.

Parent Company acquired 100% of Subsidiary Company prior to 2021. During 2021, the individual entities included in their financial statements the following:

Parent Subsidiary

Key officers' salaries 750,000 500,000

Officers' expenses 250,000 100,000

Loans to officers 1,250,000 500,000

Intercompany sales 1,500,000 0

Mont Company reported net assets totaling P8,750,000 at year-end which included the following:

Treasury shares of Mont Company at cost 250,000

Idle machinery 100,000

Trademark 150,000

Allowance for inventory writedown 200,000

Required -

1. What total amount should Green Company report as current liabilities on December 31, 2021?

a. 7,500,000

b. 5,000,000

c. 8,500,000

d. 4,000,000

2. What amount should Orange Company recognize in profit and loss for 2021 to reflect adjusting events after the end of reporting period?

a. 4,000,000

b. 3,000,000

c. 2,500,000

d. 1,500,000

3. What total amount should Parent Company report as related party disclosures in the notes to the 2021 consolidated financial statements?

a. 4,500,000

b. 1,250,000

c. 1,750,000

d. 3,000,000

4. What amount should Mont Company report as net assets at year-end?

a. 8,500,000

b. 8,400,000

c. 8,300,000

d. 8,200,000