Consolidated Financial Statements

On January 1, 20x1, ABC Co. acquired 80% interest in XYZ, Inc. The business combination resulted
to goodwill of ₱3,000. On this date, XYZ’s equity comprised of ₱50,000 share capital and ₱24,000
retained earnings. NCI was measured at its proportionate share in XYZ’s net identifiable assets. 

XYZ’s assets and liabilities on January 1, 20x1 approximate their fair values except for the following:
Carrying Fair Fair value adjustments
XYZ, Inc.
amounts values (FVA)
Inventory    23,000  31,000 8,000
Equipment (4 yrs. remaining
life)   50,000  60,000 10,000
Accumulated depreciation (10,000) (12,000) (2,000)
Totals  63,000  79,000        16,000

During 20x1, the following intercompany transactions occurred:

a. ABC Co. sold goods costing ₱12,000 to XYZ, Inc., for cash, at a markup of 40% on selling
price. A quarter of these goods are held in inventory by XYZ, Inc. by year-end.
b. ABC Co. acquired inventory from XYZ, Inc. for ₱12,000 cash. XYZ, Inc. uses a normal
markup of 25% above its cost. ABC's ending inventory included ₱4,000 from this purchase.

The year-end individual financial statements are shown below:

Statements of financial position

As at December 31, 20x1
ABC Co. XYZ, Inc.
ASSETS
Cash          41,000          67,750 
Accounts receivable          75,000          22,000 
Inventory        97,000          10,400 
Investment in subsidiary (at cost)         75,000 
Equipment        200,000          50,000 
Accumulated depreciation        (60,000)       (20,000)
TOTAL ASSETS        428,000        130,150 

LIABILITIES AND EQUITY 

Accounts payable          43,000          30,000 
Bonds payable          30,000                -   
    
Total liabilities         73,000  30,000 
Share capital         170,000          50,000 
Share premium          65,000                -   
Retained earnings        120,000          50,150 
Total equity  355,000        100,150 
TOTAL LIABILITIES AND
EQUITY        428,000        130,150 
Statements of profit or loss 
For the year ended December 31, 20x1
ABC Co. XYZ, Inc.
Sales    330,000        150,750 
Cost of goods sold  (185,000)     (96,600)
     
Gross profit    145,000  54,150 
Depreciation expense    (40,000)     (10,000)
Distribution costs  (32,000)   (18,000)
Interest expense    (3,000)    -
     
Profit for the year    70,000  26,150 

1. How much is the total unrealized gross profit from the intercompany sales of inventory?
a. 2,000
b. 800
c. 2,800
d. 3,600

1. How much is the NCI in net assets as of December 31, 20x1?

a. 15,350
b. 18,350
c. 19,350
d. 21,070

1. How much is the consolidated retained earnings?

a. 130,280
b. 136,720
c. 142,280
d. 146,280

1. How much is the consolidated profit or loss?

a. 83,350
b. 78,750
c. 86,270
d. 79,450

1. How much is the consolidated profit or loss attributable to

Owners of parent NCI
a. 80,280 3,070
b. 74,460 4,290
c. 82,990 3,280
d. 76,470 2,980

1. How much is the consolidated ending inventory?

a. 104,600
b. 103,800
 c. 120,200
d. 98,800

1. How much is the consolidated sales?

a. 426,750
b. 428,750
c. 448,750
d. 456,750

1. How much is the consolidated cost of sales?

a. 260,400
b. 248,600
c. 256,400
d. 272,400

1. How much is the consolidated total assets?

a. 448,950
b. 489,350
c. 498,750
d. 502,250

1. How much is the consolidated total liabilities?

a. 98,000
b. 102,000
c. 102,800
d. 103,000

1. How much is the consolidated total equity?

a. 234,550
b. 332,850
c. 368,500
d. 386,350

“This poor man cried out and the Lord heard him and saved him out of all his troubles.”
(Psalm 34:6)

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