Professional Documents
Culture Documents
Chapter 17
Chapter 17
MULTIPLE CHOICE
17-1:
B
Consolidated sales
Sales Papa
Sales San
Elimination of inter-company sales
Consolidated sales
Consolidated cost of goods sold
Cost of goods sold Papa
Cost of goods sold San
Eliminations:
Realized profit in beginning inventory
Unrealized profit in ending inventory
Intercompany purchases
Consolidated cost of goods sold
17-2:
( 4,000)
10,000
( 50,000)
P 636,000
60,000
( 10,000)
P 50,000
20%
P 10,000
d
Net income from own operation Pat
Pats share of adjusted net income of Susan:
Net income Susan
P200,000
Realized profit in beginning inventory
(P112,000 x 50%/150%)
37,500
Unrealized profit in ending inventory
(P33,000 x 50%/150%)
(11,000)
Consolidated net income
Attributable to minority interest (P226,500 x 30%)
Attributable to parent
17-4:
P 490,000
190,000
c
Net income Sisa
Unrealized profit in ending inventory upstream
Adjusted net income Sisa
Minority interest proportionate share
Minority interest in net income of subsidiary
17-3:
P 900,000
500,000
( 50,000)
P 1,350,000
P 200,000
226,500
P 426,500
67,950
P 358,550
b
Net income from own operations- Patton
Unrealized profit in ending inventory DS (P200,000 x .25)
Realized income
Solis net loss
Consolidated net income
P 300,000
(50,000)
250,000
(150,000)
P 100,000
87
17-5:
d
Pardos share of Santos net income (P300,000 x 75%)
Unrealized profit in ending inventory Upstream
(P200,000 x 25%/125%) x 75%
Realized profit in beginning inventory Upstream
(P150,000 x 25%/125%) x 75%
Investment income account balance, Dec. 31, 2008
17-6:
17-7:
d
Net income from own operation Puzon
Suazons adjusted net income:
Net income
Unrealized profit in ending inventoryUpstream (P25,000 x 40%)
Consolidated net income
MINIS (P100,000 x 25%)
Attributable to parent
22,500
P 217,500
P 200,000
P110,000
( 10,000)
100,000
P 300,000
(25.000)
P 275,000
2008
P 500,000
2009
P 550,000
(8,000)
492,000
200,000
P 692,000
(15,000)
8,000
543,000
225,000
P 768,000
a
Net income from own operation Pip
Adjusted net income of Sol:
Net income
P 250,000
Realized profit in beginning inventoryUpstream (P40,000 x 40%)
16,000
Unrealized profit in ending inventoryUpstream (P70,000 x 30%)
( 21,000)
Consolidated net income - 2008
17-9:
( 30,000)
b
Net income from own operation Pat
Unrealized profit in ending inventory:
2008 (P20,000 x .40)
2009 (P30,000 x .50)
Realized profit in beginning inventory
Realized income
Sun net income
Consolidated net income
17-8:
P 225,000
a
Net income from own operations Popo
Unrealized profit in ending inventory Downstream
Realized separate net income Popo
Popos share of Sottos adjusted net income:
Net income
P 360,000
Realized profit in beginning inventoryUpstream
10,000
MINIS (P370,000 x 5%)
Attributable to parent
P 400,000
245,000
P 645,000
P 500,000
( 15,000)
P 485,000
370,000
( 18,500)
P 836,500
88
17-10: a
Stockholders equity Sands, Dec. 31, 2008
P5,500,000
Unamortized difference (P1,000,000 P200,000)
800,000
Adjusted stockholders equity (net assets) Sands
P6,300,000
Minority interest in net assets of subsidiary (P6,300,000 x 40%) P2,520,000
17-11: d
Gross profit rate Short (P110,000 / P200,000)
55%
Inventories
Inventory from outsiders Power
Inventory from outsiders Short
Powers inventory acquired from Short at cost:
[P5,000 (P5,000 x 55%)}
Consolidated ending inventories
Investment income
Powers share of Shorts net income (P50,000 x 75%)
Unrealized profit in ending inventory upstream
(P5,000 x 55%) x 75%
Realized profit in beginning inventory upstream
(P10,000 x 55%) x 75%
Investment income, Dec. 31, 2008
P 5,000
25,000
2,250
P 32,250
P 37,500
( 2,063)
4,125
P 39,562
P 60,000
( 2,063)
4,125
P 62,062
P 80,000
5,500
( 2,750)
P 82,750
25%
P 20,687.50
17-12: b
Gross profit rate of Sit (P200,000 / P500,000)
Net income from own operations Pit
Adjusted net income of Sit:
Net income
P 75,000
Realized profit in beginning inventoryUpstream (P40,000 x 40%)
16,000
Unrealized profit in ending inventoryUpstream (P25,000 x 40%)
( 10,000)
Consolidated net income
MINIS (P281,000 x 10%)
Attributable to parent
40%
P 200,000
81,000
P 281,000
( 8,100)
P 272,900
89
17-13: b
Gross profit of Sir (P120,000 / P400,000)
30%
P 600,000
280,000
( 21,000)
18,000
(200,000)
P 677,000
P 200,000
P 80,000
21,000
(18,000)
83,000
283,000
(8,300)
P 274,700
17-14: a
2006
Pal Corp net income
150,000
Intercompany profit in ending inventory:
2006
(14,000)
2007
2008
Pal net income from own operation
136,000
Solo net income from own operation
100,000
Consolidated net income
236,000
MINIS:
2006(100,000 14,000) x 40%
34,400
2007(90,000 +14,000 21,000) 40%
2008(160,000 + 21,000 24,000) 40%
Consolidated NI attributable to Parent 201,600
17-15: a
Acquisition cost
Less: book value of interest acquired (400,000 x 60%)
Difference
Allocated to Equipment
( 20,000)
MINAS (40%)
8,000
Total sales
Intercompany sales (30,000 + 80,000)
Consolidated sales
2007
240,000
14,000
(21,000)
233,000
90,000
323,000
2008
300,000
21,000
( 24,000)
297,000
160,000
427,000
33,200
289,800
62,800
394,200
252,000
240,000
12,000
(12,000)
600,000
(110,000)
490,000
90
17-16: c
Total cost of goods sold (250,000 +120,000)
370,000
Adjustments due to intercompany sale:
COGS charged for intercompany sale (20,000 + 50,000) 70,000
COGS charged by: Star (30,000 6,000)
24,000
Polo (80,000 20,000)
60,000
Total
154,000
Cost of goods sold for consolidated entity:
20,000 x (24,000/30,000)
(16,000)
50,000 x (60,000/80,000)
(37,500) (100,500)
Consolidated cost of goods sold
269,500
17-17: c
Polo Corp. net income from own operation (105,000 25,000)
Unrealized profit in ending inventory-DS (6,000 x 10/30)
(2,000)
Adjusted Polo Corp. net income from own operation
Star Corp. net income from own operation:
Net income
45,000
Unrealized profit in EI-US (20,000 x 30/80)
(7,500)
Amortization (20,000/10 years)
(2,000)
Consolidated net income
MINIS (35,500 x 40%)
Attributable to Parent
17-18: a
Pepsi net income from own operation
Sarsi net income
90,000
Unrealized profit in EI (45,000 x 60/180)
(15,000)
Consolidated net income
MINIS (75,000 x 30%)
Consolidated net income attributable to Parent-2007
17-19: a
Inventory-Pepsi
P 30,000
Less: unrealized profit in books of Sarsi:
(135,000 90,000) x (30,000/135,000)
(10,000)
Inventory-Sarsi
P110,000
Less: unrealized profit in books of Pepsi:
(280,000 140,000) x (110,000/280,000)
(55,000)
Consolidated inventory 12/31/08
17-20: a
Cost of goods sold on sale of inventory on hand-1/1/08:
[45,000 x (120,000/180,000)]
Cost of goods sold on purchases from Sarsi- 2008
[(135,000 30,000) x (90,000/135,000)]
Cost of goods sold on purchases from Pepsi- 2008
[(280,000 110,000) x (140,000/280,000)]
Consolidated cost of goods sold-2008
80,000
78,000
35,500
113,500
(14,200)
99,300
160,000
75,000
235,000
(22,500)
212,500
20,000
55,000
75,000
30,000
70,000
85,000
185,000
91
17-21: b
Pepsi net income
Sarsi net income
Realized profit in beginning inventory - 2008
Unrealized profit in ending inventory- Sarsi
Unrealized profit in ending inventory- Pepsi
Consolidated net income
220,000
85,000
15,000
(10,000)
(55,000)
255,000
92
PROBLEMS
Problem 17-1
a.
b.
P200,000
P30,000
(3,000)
2,000
29,000
P229,000
P 29,000
x 30%
P 8,700
Problem 17-2
a.
b.
c.
P100,000
3,000
P103,000
P90,000
(2,000)
88,000
P191,000
P88,000
x 20%
P17,600
P350,000
55,000
(2,000)
P403,000
x 20%
P 80,600
93
Problem 17-3
a.
b.
P158,560
1,440
P160,000
20%
P800,000
P800,000
(160,000)
P640,000
x 80%
P512,000
20,000
P532,000
Problem 17-4
The computation of the selected consolidation balances are affected by the inter-company profit
in downstream intercompany sales as computed below:
Unrealized profit in ending inventory, Dec. 31, 2007 Downstream
Intercompany profit (P120,000 P72,000)
Inventory left at year end
Unrealized profit, Dec. 31, 20057
P 48,000
x 30%
P 14,400
P 50,000
x 20%
P 10,000
a.
b.
c.
Consolidated Sales
Apo
Bicol
Intercompany sales 2008
Total
Cost of goods sold
Apos book value
Bicols book value
Intercompany sales-2008
Realized profit in beginning inventory 2008
Unrealized profit in ending inventory 2008
Consolidated cost of goods sold
Operating expenses
Apo
Bicol
Total
P800,000
600,000
(250,000)
P1,150,000
P 535,000
400,000
(250,000)
( 14,400)
10,000
P 680,600
P 100,000
100,000
P 200,000
94
d.
e.
f.
Inventory
Apo
Bicol
Unrealized profit in ending inventory, Dec. 31, 2008
Consolidated inventory
Minority Interest in Net Assets of Subsidiary
Stockholders equity , Jan. 1, 2008 Bicol
Increase in earnings in 2008 (P100,000 P50,000)
Stockholders equity, Dec. 31, 2008 Bicol
Minority interest
MINAS
g.
P 30,000
P 298,000
700,000
(10,000)
P 988,000
P 950,000
50,000
P1,000,000
x 30%
P 300,000
Problem 17-5
P Company and Subsidiary
Consolidated Income Statement
Year Ended December 31, 2008
Sales (P2,000,000 + P1,000,000 P600,000)
Cost of goods sold (Schedule 1)
Gross profit
Expenses
Income before income tax
Provision for income tax
Consolidated net income after income tax
Attributable to minority interest (Schedule 2)
Attributable to parent
P2,400,000
704,000
1,696,000
600,000
1,096,000
440,000
656,000
44,000
P 612,000
Schedule 1:
Cost of sales P Company
Purchases from S Company
Intercompany profit in beginning inventory (P60,000 x 25%)
Intercompany profit in ending inventory (P76,000 x 25%)
Total
Cost of sales S Company
Consolidated cost of sales
P 800,000
(600,000)
( 15,000)
19,000
P 204,000
500,000
P 704,000
Schedule 2:
Net income S Company
Realized profit in beginning inventory Upstream
Unrealized profit in ending inventory Upstream
Adjusted net income
Minority interest
MINIS
P 180,000
15,000
(19,000)
P 176,000
x 25%
P 44,000
95
Problem 17-6
a.
(2)
(3)
(4)
Dividend income
Minority interest in net assets of subsidiary (20%)
Dividends declared- D (P32,000 / 80%)
To eliminate intercompany dividends.
32,000
8,000
40,000
Common stock S
90,000
Retained earnings S
220,000
Investment in S Co. stock
Minority interest in net assets of subsidiary
To eliminate equity accounts of S on the date of
acquisition.
Minority interest in net assets of subsidiary
Retained earnings, Jan. 1
Cost of goods sold
To eliminate realized profit in beginning inventory
4,000
16,000
Sales
150,000
20,000
b.
c.
248,000
62,000
135,000
15,000
8,000
8,000
P200,000
160,000
40,000
20,000
(15,000)
P 45,000
x 20%
P 9,000
P 45,000
45,000
P 90,000
P 310,000
45,000
P 355,000
x 20%
P 71,000
96
Problem 17-7
a.
b.
Consolidated Sales
Reported total sales (P600,000 + P510,000)
Intercompany sales (P140,000 + P240,000)
Consolidated sales
P1,170,000
(380,000)
P 790,000
P 471,429
425,000
( 360,000)
P 536,429
d.
140,000
12,000
128,000
240,000
8,000
232,000
P 70,000
(12,000)
P 58,000
12,000
P 70,000
P 48,000
42,000
(20,000)
P 70,000
97
Problem 17-8
a.
b.
c.
P 100,000
x 60%
P 60,000
P 160,000
x 60%
P 96,000
Intercompany Sales
Sales P Company
Sales S Company
Intercompany sales 2008
Consolidated sales
P2,000,000
1,000,000
(400,000)
P2,600,000
P 800,000
600,000
(400,000)
( 60,000)
96,000
P1,036,000
Cash
80%
96,000
96,000
48,000
48,000
36,000
98
d.
(1)
(2)
(3)
(4)
(5)
(6)
60,000
12,000
60,000
12,000
60,000
60,000
(8)
e.
60,000
96,000
400,000
Cost of sales
To eliminate intercompany sales.
(7)
1,088,000
272,000
Accounts payable
50,000
Accounts receivable
To eliminate intercompany payables and receivables.
Minority interest in net income of subsidiary
24,000
Minority interest in net assets of subsidiary
To establish minority share of S net income
(P120,000 x 20%)
400,000
50,000
24,000
P420,000
60,000
( 96,000)
P384,000
120,000
P504,000
99