Chapter 17

CHAPTER 17
MULTIPLE CHOICES - COMPUTATIONAL

17-1: b
Consolidated sales
Sales - Papa
900
,000
Sales - San
50
0,000
Elimination of inter-company sales
50,000)
Consolidated sales
P 1,350,
Consolidated cost of goods sold

Cost of goods sold - Papa
000
490
,000
Cost of goods sold - San
19
0,000
Eliminations:
Realized profit in beginning inventory
4,000)
Unrealized profit in ending inventory
10,000
Intercompany purchases
50,000)
6,000
17-2:
(
P
63
c
Net income - Sisa
0,000
Unrealized profit in ending inventory - upstream
( 10,000)
Adjusted net income - Sisa
0,000
NCI proportionate share
20%
NCI in net income of subsidiary
17-3:
10,000
d
Net income from own operation - Pat
P 200,0
00
Adjusted net income of Susan:
Net income - Susan
P200,000
(P112,000 x 50%/150%)
37,500
(P33,000 x 50%/150%)
(11,000)
226,
500
Consolidated net income
Attributable to NCI (P226,500 x 30%)
P 426,500
67
,950
Attributable to parent
50
17-4:
P 358,5
Net income from own operations- Patton
P 300,0
00
Unrealized profit in ending inventory - DS (P200,000 x .25)
(50,
Adjusted net income for own operations - Patton
250,
000)
000
Solis net loss from own operations
(150,
000)
17-5:
P 100,000
d
Pardo's share of Santos' net income (P300,000 x 75%)
P 225,00
0
Unrealized profit in ending inventory - Upstream
(P200,000 x 25%/125%) x 75%
( 30,
000)
Realized profit in beginning inventory - Upstream
(P150,000 x 25%/125%) x 75%
22
,500
Investment income account balance, Dec. 31, 2011
P 217,50
d
Net income from own operation - Puzon
P 200,00
0
17-6:
0
Suazon's adjusted net income from own operations:
Net income
P110,000
Unrealized profit in ending inventoryUpstream (P25,000 x 40%)
( 10,000)
100,000
P 300,000
(25.
000)
P 275,00
0
17-7:
b
2010
2011
Net income from own operation - Pat
P 500,000
P 550,0
00
Unrealized profit in ending inventory:
2010 (P20,000 x .40)
2011 (P30,000 x .50)
(8,000)
(15,
000)
,000
Realized income
Sun net income
492,000
543,000
200,000
225,
000
17-8:
P 692,000
P 768,000
a
Net income from own operation - Pip
00
Adjusted net income from own operation - Sol
P 400,0
Net income
P 250,000
Realized profit in beginning inventoryUpstream (P40,000 x 40%)
16,000
( 21,000)
245,000
Consolidated net income - 2011
00
17-9:
P 645,0
a
Net income from own operations - Popo
P 500,0
00
Unrealized profit in ending inventory - Downstream
15
,000)
Realized net income from own operation - Popo
P 485,0
00
Adjusted net income from own operations - Sotto
Net income
P 360,000
Realized profit in beginning inventoryUpstream
10,000
370,000
P 855,000
18
,500
P 836,5
00
17-10: d, should be P(19,200).
Net income - Sand Company
Realized profit in beg. Inventory (P120,000 x .20)
00
Unrealized profit in ending inventory (P360,000 x .20)
0)
Amortization of allocated excess P1.000,000 / 5)
(200,000)
Adjusted net loss - Sand Company
)
NCI (P48,000 x 40%)
)
17-11: d
Gross profit rate - Short (P110,000 / P200,000)
Inventories
Inventory from outsiders - Power
P200,000
24,0
(72,00
P(48,000
P(19,200
55%
P
5,0
00
Inventory from outsiders - Short
25,0
00
Power's inventory acquired from Short - at cost:
[P5,000 - (P5,000 x 55%)}
,250
Consolidated ending inventories
P 32,250
Investment income
Power's share of Short's net income (P50,000 x 75%)
P 37,50
0
Unrealized profit in ending inventory - upstream
(P5,000 x 55%) x 75%
( 2,0
63)
Realized profit in beginning inventory - upstream
(P10,000 x 55%) x 75%
4,
125
Investment income, Dec. 31, 2011
P 39,56
Investment in Short Company

Acquisition cost (P80,000 x 80%)
P 60,00
0
2,
063)
4,
125
Investment in Short Company, Dec. 31, 2011
P 62,06
NCI in Short company's net income

Short's net income from own operations
P 50,00
0
Realized profit in beginning inventory (P10,000 x 55%)
5,
500
Unrealized profit in ending inventory (P5,000 x 55%)
( 2,
750)
Adjusted net income from own operations
P 52,750
2
5%
NCI in Short's net income
P 13,18
7.50
17-12: b
Gross profit rate of Sit (P200,000 / P500,000)
40%
Net income from own operations - Pit
P 200,00
0
Adjusted net income of Sit:
Net income
P 75,000
Realized profit in beginning inventoryUpstream (P40,000 x 40%)
16,000
( 10,000)
81,000
P 281,000
(
,100)
P 272,90
0
17-13: b
Gross profit of Sir (P120,000 / P400,000)
30%
Consolidated cost of sales

Cost of sales - Pig
600,
000
Cost of sales - Sir
280
,000
Eliminations:
( 2
1,000)
8,000
(200
,000)
677,

Net income from own operations - Pig
P 200,0
000
00
Sir's adjusted net income:
Net income
P 80,000
21,000
(18,000)
83,000
283,000
(
8,300)
P 274,7
00
17-14: a
2009
2010
2011
Pal Corp net income
150,000
240,000
300,000
Intercompany profit in ending inventory:
2009
(14,000)
14,000
2010
(21,000
)
21,000
2011
(
24,000)
Pal net income from own operation
297,000
Solo net income from own operation
160,000
136,000
100,000
233,000
90,000

427,000
Attributable to NCI
236,000
323,000
2009(100,000 - 14,000) x 40%

34,400
2010(90,000 +14,000 - 21,000) 40%
2011(160,000 + 21,000 - 24,000) 40%
33,200
62,800
Attributable to Parent
394,200
201,600
289,800
17-15: a
Total sales
600,000
Intercompany sales (30,000 + 80,000)
(110,000)
Consolidated sales
490,000
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)
24,00
0
Polo (80,000 - 20,000)
60,000
Total
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)
269,500
154,000
17-17: c
Polo Corp. net income from own operation (105,000 - 25,000)
80,000
Unrealized profit in ending inventory-DS (6,000 x 10/30)
(2,000)
Adjusted Polo Corp. net income from own operation
78,000
Star Corp. net income from own operation:
Net income
Unrealized profit in EI-US (20,000 x 30/80)
00)
Amortization (20,000/10 years)
35,500
,500
45,000
(7,5
(2,000)
113
Attributable to NCI (35,500 x 40%)

(14,200)
Attributable to Parent
99,300
17-18: a
Pepsi net income from own operation
160,000
Sarsi net income
Unrealized profit in EI (45,000 x 60/180)
75,000
90,000
(15,000)
235,0
00
Attributable to NCI (75,000 x 30%)
(22,500)
Attributable to Parent-2011
212,500
17-19: a
Inventory-Pepsi
P 30,000
Less: unrealized profit in books of Sarsi:
(135,000 - 90,000) x (30,000/135,000)
20,000
Inventory-Sarsi
P110,000
Less: unrealized profit in books of Pepsi:
(280,000 - 140,000) x (110,000/280,000) (55,000)
55,000
Consolidated inventory 12/31/11
17-20: a
Cost of goods sold on sale of inventory on hand-1/1/10:
[45,000 x (120,000/180,000)]
30,000
Cost of goods sold on purchases from Sarsi- 2010
[(135,000 - 30,000) x (90,000/135,000)]
70,000
Cost of goods sold on purchases from Pepsi- 2010
[(280,000 - 110,000) x (140,000/280,000)]
85,000
Consolidated cost of goods sold-2011
185,000
17-21: b
Pepsi net income
220,000
Sarsi net income
85,000
Realized profit in beginning inventory - 2011
15,000
Unrealized profit in ending inventory- Sarsi
(10,000)
75,000
(10,000)
Unrealized profit in ending inventory- Pepsi
(55,000)
Consolidated net income - 2011
255,000
17-22: b
Net income from own operations - P Company
P200,000
S Co. adjusted net income:
Net income - S
Unrealized profit in ending inventory Upstream (P9,000 x 50/150)
Realized profit in beginning inventoryUpstream (P6,000 x 50/150)
P30,000
(3,000)
2,000
29,000
229,00
0
Attributzble to NCI (P29,000 x 30%)
8,700
P220,300
17-23: b
NCI, December 31, 2010 [(P245,000/70%) x 30%]
NCI in subsidiary dividends (P20,000 x 30%)
( 6,000)
P105,000
8,700
NCI in S Company, December 31, 2011
P107,700
17-24: c
P Company (P400,000 x 20%)
P
80,000
S Company:
Sales
P416,000
Cost of goods sold (P400,000 x 80%)
Add write down of ending inventory
330,000
Gross profit
P 86,000
P320,000
10,000
17-25
Sales
256,000*
Gross profit
* Purchases at cost (P400,000 x 80%)
P320,000
Less ending inventory at cost (P80,000 x 80%)
00
P416,000
P160,000
64,0
P256,000
Note that cost is lower than market
17-26: a
Sales
Cost of goods sold
P270,000
171,25
0
Gross profit
98,7
Other income
Other expenses
47,0
50
00
Attributable to NCI
51,750
3,
350
Attributable to controlling interest
P 48,40
0
Supporting computations:
Sales:
Pablo Company
Sally Company
P220,000
120,00
0
Intercompany sales
(70,00
Consolidated sales
P270,000
Consolidated cost of goods sold:

Pablo Company
Sally Company
P150,000
90,0
0)
00
Intercompany sales
( 70,0
00)6
750)
3,
5.
000
Consolidated costs of goods sold
P171,250
Other income:
Pablo Company
5,0
00
Computer services
(5,
000)
:
Other expenses:
Pablo Company
P 40,00
0
Sally Company
12,0
Computer services
(5,0
00
00)
Consolidated other expenses
P 47,00
NCI in net income of Sally

Net income
P 35,00
0
Realized profit in beginning inventory (upstream)
3,
Unrealized profit in ending inventory (upstream)
(5,
750
000)
Adjusted net income
P 16,75
0
20%
NCI
3,3
50
PROBLEMS
Problem 17-1
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, 2010 - Downstream
Intercompany profit (P120,000 - P72,000)
P 48,000
Inventory left at year end
x 30%
Unrealized profit, Dec. 31, 2010
P
14,400
Unrealized profit in ending inventory, Dec. 31, 2011 - Downstream
Intercompany profit (P250,000 - P200,000)
P 50,000
Inventory left at year end

x 20%
Unrealized profit, Dec. 31, 2011
P
10,000
a.
Consolidated Sales
Apo
P800,000
Bicol
600,000
Intercompany sales - 2011
(250,000)
Total
P1,150,000
b.
Cost of goods sold
Apo's book value
P 535,000
Bicol's book value
400,000
Intercompany sales-2011
00)
Realized profit in beginning inventory - 2011
( 14,400)
Unrealized profit in ending inventory - 2011
10,000
P
680,600
c.
Operating expenses
Apo
P 100,000
Bicol
100,000
Total
P 200,000
d.
Dividend Income - 0 (eliminated)
e.
NCI in Net Income of Subsidiary (P100,000 x 20%)
(250,0
P 20,000
f.
Inventory
Apo
P 298,000
Bicol
700,000
Unrealized profit in ending inventory, Dec. 31, 2011
(10,000)
Consolidated inventory
P
988,000
Problem 17-1, continued:

g.
NCI
NCI, December 31, 2010 [ (P902,000/80%) x 20%]
NCI in dividends paid by Bicol (P50,000 x 20%)
(10,000)
P225,500
NCI in net income of subsidiary (P100,000 x 20%)

20,000
Total NCI, 12/31/11
P235,500
Problem 17-2
P Company and Subsidiary
Consolidated Income Statement
Year Ended December 31, 2011
Sales (P2,000,000 + P1,000,000 - P600,000)
P2,400,000
Cost of goods sold (Schedule 1)
704,000
Gross profit
1,696,000
Expenses
600,000
Income before income tax
1,096,000
Provision for income tax
440,000
Consolidated net income after income tax
656,000
Attributable to NCI (Schedule 2)
44,000
P 612,000
Schedule 1:
Cost of sales - P Company
P 800,000
Purchases from S Company
(600,000)
Intercompany profit in beginning inventory (P60,000 x 25%)
( 15,000)
Intercompany profit in ending inventory (P76,000 x 25%)
9,000
Total
P 204,000
Cost of sales - S Company
500,000
P 704,000
Schedule 2:
Net income - S Company
000
15,000
(19,000)
Adjusted net income
P 176,000
x
180,
25%
P
44,000
Problem 17-3
a.
Working Paper Eliminating Entries

(1)
Dividend income
32,000
NCI (20%)
Dividends declared- D (P32,000 / 80%)
8,000
40,000
To eliminate intercompany dividends.
Problem 17-3, Continued
(2)
Common stock - S
Retained earnings - S
90,000
220,0
00
Investment in S Co. stock
248,000
NCI
62,000
To eliminate equity accounts of S on the date of
acquisition.
(3)
NCI
Retained earnings, Jan. 1
Cost of goods sold
4,000
16,000
20,000
To eliminate realized profit in beginning inventory
(4)
Sales
150,000
Cost of goods sold
135,000
Inventory, Dec. 31 (P45,000 x 33.33%)
15,000
To eliminated intercompany sales and unrealized
profit in ending inventory.
(5)
9,000
NCI
9,000
To establish minority interest in net income of S Co.
computed as follows:
Sales
Cost and expenses (P140,000 +P20,000)
P200,000
160,00
0
Net income
40,000
20,0
(15,0
00
00)
Adjusted net income
P 45,00
0
x 20
%
9,0
00
b.
Consolidated Net Income

P Company net income from own operations (P250,000 - P32,000)
P 218,0
00
S Company adjusted net income
45
,000
P 263,0
00
c.
Non-controlling Interest
NCI, August 30, 2011 [(P248,000/80%) x 20%]
P
62,000
NCI in subsidiary dividends [(P32,000/80%) x 20%]
( 8,000)
9,000
P
NCI
63,000
Problem 17-4
a.
Consolidated Sales
Reported total sales (P600,000 + P510,000)
P1,170,000
Intercompany sales (P140,000 + P240,000)
(380,000)
Consolidated sales
P 790,000
b.
Consolidated Cost of Goods Sold

Cost of goods sold:
Pato (P660,000 / 140%)
P
471,429
Sales (P510,000 / 120%
425,000
Amount to be eliminated (P128,000 + P232,000) see entry below
(
360,000)
Total
P 536,429
Elimination of intercompany sales and intercompany profit in inventory:
Downstream Sales
Sales
Inventory (P42,000 x 40/140)
12,000
Cost of goods sold
140,000
128,000
Upstream Sales
Sales
Inventory (P48,000 x 20/120)
8,000
Cost of goods sold
232,000
c.
240,000

Net income from own operations - Pato
P
70,000
Unrealized profit in ending inventory - Downstream
(12,000)
Adjusted net income - Pato
P 58,000
Adjusted net income of Sales Co.
Net income
12,000
0
d.
Consolidated Inventory, Dec. 31, 2011

Inventory reported - Pato
P 48,000
Inventory reported - Sales
42,000
Unrealized profit in ending inventory (P8,000 + P12,000)
(20,000)
Consolidated inventory
P
70,000
Problem 17-5
P Company and Subsidiary S Company
Consolidation Working Paper
Eliminations
P20,000
(8,000)
P 70,00
Adjustments
ConsoliP Company
S Company
Debit
Credit
dated
Income Statement
Sales
12,000,000
1,300,000
(5) 400,000
12,900,000
Dividend income
210,000
(1)
210,000
Total revenue
12,210,000
1,300,000
12,900,000
Cost of goods sold
7,000,000
750,000
(7)
30,000
(5) 400,000
7,380,000
Operating expenses
4,210,000
50,000
(4)
40,000
4,300,000
Total cost and expenses
11,210,000
800,000
11,680,000
Net income to retained earnings

1,000,000
500,000
1,220,000
Statement of Retained
Earnings
Retained earnings, January 1

5,500,000
2,200,000
(2)2,200,000
5,500,000
Net income from above
1,000,000
500,000
1,220,000
Total
6,500,000
2,700,000
6,720,000
Dividends declared
210,000
(1) 210,000
Retained earnings,12/31 to BS
6,500,000
2,490,000
6,720,000
Statement of FP
Cash
810,000
170,000
980,000
Accounts receivable
425,000
445,000
(6)
25,000
845,000
Inventory
600,000
275,000
(7)
30,000
845,000
Property, plant and equipment
4,000,000
2,300,000
(3) 400,000
(4)
40,000
6,660,000
Investment in S Company
3,200,000
(2)2,800,000
-
(3)
400,000
Total assets
9,035,000
3,1900,000
9,330,000
Accounts payable
35,000
100,000
(6)
25,000
110,000
Common stock
1,000,000
400,000
(2) 400,000
1,000,000
Additional paid in capital
1,500,000
200,000
(2) 200,000
1,500,000
Retained earnings from above
6,500,000
2,490,000
6,720,000
9,035,000
3,190,000
3,905,000
3,905,000
9,330,000
Eliminations and Adjustments

(1)
Eliminate intercompany dividends
(2)
Eliminate subsidiary's equity balances
(3)
Allocate excess to equipment
(4)
Amortize allocated excess to equipment
(5)
Eliminate intercompany sale of P400,000
(6)
Eliminate intercompany trade balances of P25,000
(7)
Eliminate intercompany profit (30%) applicable to P100,000 (P400,000 P300,000)
of intercompany goods in P Company.
Problem 17-5, Continued

Determination and Allocation of Excess Schedule
Price paid by the parent
P3,200,000
Less book value of interest acquired (100%)
Common stock - S Company
Additional paid in capital - S Company
Retained earnings, Jan. 1 - S Company
00,000
Excess allocated to equipment
000
400,000
200,000
2.200,000
Amortization (P400,000/10)
,000
2,8
P
400,
40
Note: There is no NCI since this is a wholly-owned subsidiary.
Problem 17-6
Determination and Allocation of Excess Schedule:
Price paid by the parent (80%)
Non-controlling interest [(P425,000/80%) x 20%]
Total
0
Less book value of interest acquired:
Common stock - So
APIC - So
Retained earnings
Total equity
Interest acquired
0
Excess allocated to goodwill
Fair Value Analysis:
Company
Parent
NCI
Implied
Price
Value
P425,000
106,250
531,25
P200,000
100,000
100,000
P400,000
80%
320,00
P131,250
Fair Value
(80%)
(20%)
Company fair value

P531,250
P425,000
P106,250
Fair value of net assets excluding
goodwill
400,000
320,000
80,000
Goodwill
P131,250
P105,000
P 26,250
Po Company and Subsidiary So Company

Consolidation Working Paper
Eliminations
Adjustments
ConsoliPo Company
So Company
Debit
Credit
dated
Income Statement
Sales
880,000
630,000
(6) 32,000
(8) 30,000
1,448,000
Dividend income
24,000
(2) 24,000
Total revenue
904,000
630,000
1,448,000
Cost of goods sold
704,000
504,000
(7)
1,320
(10)
750
(5)
1,350
(6) 32,000
(8)
700
(9) 30,000
1,146,020
Other expenses
130,000
81,000
211,000
Total cost and expenses
834,000
585,000
1,357,020
Net income
70,000
45,000
90,980
NCI in net income of Subsidiary
(12)
8,990
(8,990)
Net income to retained earnings
70,000
45,000
81,990
Statement of Retained
Earnings
Retained earnings, January 1

1,105,000
140,000
(1)
8,000
(3)100,000
(5)
1,350
(8)
560
1,135,090
Net income from above
70,000
45,000
81,990
Total
1,175,000
185,000
1,217,080
Dividends declared
25,000
30,000
(2) 30,000
25,000
Retained earnings,12/31 to BS
1,150,000
155,000
1,192,080
Statement of FP
Cash
216,200
44,300
260,500
Accounts receivable
290,000
97,000
(11) 15,000
372,000
Inventory
310,000
80,000
(7)
(10)
1,320
750
387,930
Pant assets (net)
1,991,000
340,000
2,331,000
425,000
(3)320,000
(4)105,000
Goodwill
60,000
(4)131,250
191,250
Total assets
3,292,200
561,300
3,542,680
Accounts payable
642,200
106,300
(11) 15,000
733,500
Common stock
250,000
200,000
(3)200,000
250,000
Additional paid in capital
1,250,000
100,000
(3)100,000
1,250,000
Retained earnings from above
1,150,000
155,000
1,192,080
Non-controlling interest (NCI)
(2)
(1)
6,000
8,000
(8)
140
(3) 80,000
(4) 26,250
(12)
8,990
117,100
3,292,200
561,300
659,360
659,360
3,542,680
Eliminations and Adjustments

(1)
Recognize NCI in subsidiary's increase in undistributed earnings (P40,00
0 x
20%)
(2)
Eliminate intercompany dividends.
(3)
Eliminate subsidiary's equity at date of acquisition
(4)
Allocate excess to goodwill.
(5)
Eliminate realized profit in beginning inventory (P9,000 x 15%) = P1,35
0
(Downstream)
(6)
Eliminate intercompany downstream sales from April 1, 2008 to March 31,
2009, P32,000.
(7)
Eliminated unrealized profit in ending inventory (downstream), P6,000 x
22% =
P1,320.
(8)
Eliminate realized profit in beginning inventory (upstream) P3,500 x 20%
=
P700.
(9)
Eliminate intecompany upstream sales on March 31, 2009, P30,000.
(10)
Eliminate unrealized profit in ending inventory (upstream), P3,000 x 25%
=
P750.
(11)
Eliminate intercompany payables and receivables ,P10,000 + P5,000 = P15,
000.
(12)
Recognized non-controlling interest (NCI) in net income of subsidiary co
mputed
as follows:
Net income of So Company
Realized profit in beginning inventory (upstream)
Unrealized profit in ending inventory (upstream)
Adjusted income
NCI share
P45,000
700
(750)
P44,950
20%
P 8,990
(2)
Po Company and Subsidiary So Company
Consolidated Income Statement
Fiscal Year Ended March 31, 2011
Sales
00
Cost of goods sold
020
Gross profit
,980
Expenses
,000
Attributable to NCI
8,990
Attributable to controlling interest
,990
P1,448,0
1,146,
301
211
P
90,980
P
81
Problem 17-7
a.
Unrealized Profit in Beginning Inventory

Beginning inventory - Downstream
P 100,0
00
Gross profit rate (P240,000/ P400,000)
x 6
0%
Unrealized profit in beginning inventory
60,000
Unrealized Profit in Ending Inventory

Ending inventory - Downstream (P200,000 x 80%)
Gross profit rate
P 160,000
x 6
0%
96,
Intercompany Sales
Sales - P Company
P2,000,0
000
b.
00
Sales - S Company
1,000,
000
Intercompany sales - 2011
(400,
000)
Consolidated sales
P2,600,0
00
Intercompany Cost of Sales
Cost of sales - P Company
800,
000
Cost of sales - S Company
600
,000
(400,
Intercompany profit in beginning inventory
( 60
000)
,000)
Intercompany profit in ending inventory
6,000
P1,036,0
00
c.
Parent's interest (40,000 shares / 50,000 shares)

80%
P Company Entries - 2011:
(1)
Investment in S Company stock
Income from subsidiary
96,000
96,000
To record P's share of S Co. income

(P120,000 x 80%)
(2)
Cash
48,000
48,000
To record dividends received from S
(P60,000 x 80%)
(2)

36,000
36,000
To adjust income from subsidiary for intercompany
profit in :
Ending inventory
(96,000)
Beginning inventory
60,000
Net adjustment
( 36,000)
Problem 17-7, continued:

d.
Working Paper Eliminating Entries:
(1)

NCI (P60,000 x 20%)
Dividends declared - S
60,000
12,000
60,000
12,000
To eliminate intercompany dividends.
(2)
Common stock - S Co.

Retained earnings - S Co.
1,088,000
NCI
272,000
To eliminate equity accounts of S Company as of
beginning of year.
(3)
Goodwill
500,000
860,000
60,000
60,000
To allocate excess to goodwill.
(4)
Retained earnings - Jan. 1

Cost of sales
60,000
60,000
To eliminate realized profit in beginning inventoryDownstream.
(5)
Cost of sales
Inventories
96,000
96,000
To eliminate unrealized profit in ending inventoryDownstream.
(6)
Sales
400,000
Cost of sales
400,000
To eliminate intercompany sales.
(7)
Accounts payable
Accounts receivable
50,000
50,000
To eliminate intercompany payables and receivables.
(8)
NCI
24,000
24,000
To recognize NCI share in S Company net income
(P120,000 x 20%)
e.

Net Income from own operations - P Company
P420,000
60,000
( 96,000)
Adjusted net income - P Compay
S Company net income
(P480,000 - P60,000)
P384,000
120,000
107
P504,000

Chapter 17

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Chapter 17

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CHAPTER 17

MULTIPLE CHOICES - COMPUTATIONAL

Consolidated cost of goods sold

Net income from own operations- Patton

Adjusted net income for own operations - Patton

Investment in Short Company

NCI in Short company's net income

Net income from own operations - Pit

Consolidated cost of sales

Consolidated net income

Consolidated net income

2009(100,000 - 14,000) x 40%

Attributable to NCI (35,500 x 40%)

Note that cost is lower than market

Consolidated cost of goods sold:

Realized profit in beginning inventory (P15,000 x 25%)

Unrealized profit in ending inventory (P20,000 x 25%)

NCI in net income of Sally

Unrealized profit in ending inventory (upstream)

Inventory left at year end

Dividend Income - 0 (eliminated)

NCI in Net Income of Subsidiary (P100,000 x 20%)

Problem 17-1, continued:

NCI in net income of subsidiary (P100,000 x 20%)

Working Paper Eliminating Entries

NCI in net income of subsidiary

Unrealized profit in ending inventory - Upstream

Adjusted net income

Consolidated Net Income

Consolidated Cost of Goods Sold

Consolidated Net Income

Consolidated Inventory, Dec. 31, 2011

Net income to retained earnings

Retained earnings, January 1

Eliminations and Adjustments

Problem 17-5, Continued

Note: There is no NCI since this is a wholly-owned subsidiary.

Company fair value

Po Company and Subsidiary So Company

Retained earnings, January 1

Eliminations and Adjustments

Unrealized Profit in Beginning Inventory

Unrealized Profit in Ending Inventory

Intercompany profit in beginning inventory

Parent's interest (40,000 shares / 50,000 shares)

To record P's share of S Co. income

Income from subsidiary

Problem 17-7, continued:

Income from subsidiary

Common stock - S Co.

Retained earnings - Jan. 1

NCI in net income of subsidiary

Consolidated Net Income

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