NAME: MAHUSAY, JETH A.

DATE: OCTOBER 2020

INSTRUCTOR: MS. ANNA MAE MAGBANUA, CPA COURSE/YR: BSA- 3
SUBJECT: ACCTG FOR BUSINESS COMBINATION

MODULE 2
CASELETS

Case 1
FV of Acquisition Cost P400,000
Less: FVNA
Capital stock P50,000
Retained earnings 90,000
Inventory undervaluation 20,000
Plant asset undervaluation 40,000 (200,000)
Goodwill P200,000

Eliminating entries
Ordinary shares 50,000
Retained earnings 90,000
Inventory 20,000
Plant asset 40,000
Goodwill 200,000
Investment in Sorrel 400,000

Cost of sales 20,000

Depreciation 10,000
Accumulated depreciation 10,000
Inventory 20,000

Income from Sorrel 20,000

 Investment in Sorrel 20,000

Consolidated
Palmer Sorrel
Accounts Elimination Income
Statement
Sales P500,000 P400,000 P900,000
Income from Sorrel 20,000 20,000 -
Cost of sales (300,000) (300,000) 20,000 (620,000)
Other expenses (100,000) (50,000) (150,000)
Depreciation expense 10,000 (10,000)
Net income P120,000 P50,000 P120,000

Consolidated
Retained earnings
Accounts Palmer Sorrel Elimination

Retained earnings, beg.

P340,000 P90,000 90,000 P340,000

Net income 120,000 50,000 120,000

Dividends (50,000) (50,000)
Retained earnings,
P410,000 P140,000 P410,000
end

Elimination Consolidated
Accounts Palmer Sorrel
Balance Sheet
Current assets P240,000 P100,000 P340,000
Plant assets 500,000 300,000 40,000
830,000
Accu. Dep. (10,000)
Investment in Sorrel 420,000 (420,000) -
Goodwill 200,000 200,000
Total assets P1,160,000 P400,000 P1,370,000

Liabilities P450,000 P210,000 P660,000

Ordinary shares 300,000 50,000 50,000 300,000
Retained earnings, end
410,000 140,000 410,000

Total Liabilities P1,160,000 P400,000 P1,370,000

And Owner’s equity
Case 2
FV of Acquisition Cost P756, 000 80%
Non-controlling interest 169, 000 20%
Less: FV of identifiable net assets (845, 000) 100%
Goodwill P 80,000

Eliminating entries
Ordinary shares 300,000
Retained earnings 400,000
Investment in Sayad 560,000
Non-controlling interest 140,000

Inventories 30,000
Land 50,000
Building 100,000
Patent 40,000
Goodwill 80,000
Equipment 75,000
Investment in Sayad 196,000
Non-controlling interest 29,000

Cost of sales 30,000

Other expenses 1,500
Accumulated depreciation – equipt. 7,500
Inventory 30,000
Accumulated depreciation – bldg. 5,000
Accumulated amortization 4,000

Income from Sayad 94,800

Investment in Sayad 94,800

Investment in Sayad 40,000

Non-controlling interest 10,000
Dividends 50,000
 Share of NCI in subsidiary income 23,700
Non-controlling interest 23,700

Consolidated
Accounts Pura Sayad Elimination Income
Statement
Sales P1,000,000 P500,000 P1,500,000
Income from Sayad 94,800 94,800 -
Cost of sales (400,000) (150,000) 30,000 (580,000)
Other expenses (360,000) (200,000) 1,500 (561,500)
Net income P334,800 P150,000 P358,500

Consolidated
Statement of
Accounts Pura Sayad Elimination
Retained
earnings
Retained earnings,
P600,000 P400,000 400,000 P600,000
beg.
Net income 334,800 150,000 358,500
Dividends paid (100,000) (50,000) (50,000) (100,000)
Share of NCI in
23,700 (23,700)
subsidiary income
Retained earnings,
P834,800 P500,000 P834,800
end

Elimination Consolidated
Accounts Pura Sayad
Balance Sheet
Cash P200,000 P100,000 P300,000
Accounts receivable 150,000 50,000 200,000
Inventories 100,000 40,000 140,000
Land 150,000 50,000 200,000
Building 260,000 100,000
360,000

Equipment 700,000 490,000 (75,000)

1,115,000

Patent 40,000
40,000
 Investment in Sayad 810,800 (810,800)
Goodwill 80,000 80,000
Total assets P1,960,800 P1,090,000 P2,435,500

Accounts payable P124,000 P190,000 P314,000

Accumulated
Depreciation
Building 60,000 5,000 65,000
Equipment 402,000 40,000 7,500 434,500
Patent 4,000 4,000

Ordinary shares 200,000 300,000 300,000 200,000

Additional paid-in
400,000 400,000
capital
Retained earnings,
834,800 500,000 834,800
end
Non-controlling
(182,700) 182,700
interest
Total Liabilities P 1,960,800 P1,090,000 P2,2435,500
and
Stockholder’s
equity

Case 3
Eliminating entries
Ordinary shares 500,000
Retained earnings 100,000
Investment in Soul 420,000 Non-
controlling interest 180,000
Inventories 7,143
Building 20,000
Equipment 30,000
Goodwill 40,000
Investment in Soul 40,000
 Non-controlling interest 17,143

Cost of sales 7,143

Depreciation expense 12,857
Impairment loss 5,000
Goodwill 5,000
Inventory 7,143
Building 2,857
Equipment 10,000

Income from Soul 51,000

Investment in Soul 51,000

Dividends payable 14,000

Accounts payable 10,000
Dividends receivable 14,000
Accounts receivable 10,000

Investment in Soul 35,000

Non-controlling interest 15,000
Dividends 50,000

Share of NCI in subsidiary income 24,000

Non-controlling interest 24,000

Consolidated
Elimination
Accounts Paris BV Soul BV Income
Debit (Credit)
Statement
Sales P810,000 P700,000 P1,510,000
Income from Soul 51,000 51,000 -
Cost of sales (300,000) (400,000) 7,143 (707,143)
Depreciation
(155,000) (60,000) 12,857 (227,857)
expenses
Impairment loss 5,000 (5,000)
Other expenses (160,000) (140,000) (300,000)
Net income P246,000 P100,000 P270,000
Accounts Paris BV Soul BV Elimination Consolidated
 Statement of
Debit (Credit) Retained
earnings
Retained earnings,
P300,000 P100,000 100,000 P300,000
beg.
Net income 246,000 100,000 270,000
Dividends (200,000) (50,000) (50,000) (200,000)
Share of NCI in
24,000 (24,000)
subsidiary income
Retained earnings,
P346,000 P150,000 P346,000
end
Elimination Consolidated
Accounts Paris BV Soul BV
Debit (Credit) Balance Sheet
Cash P86,000 P60,000 P146,000
Accounts receivable 100,000 70,000 (10,000) 160,000
Dividends receivable 14,000 (14,000) -
Inventories 150,000 100,000 250,000
Other current assets 70,000 30,000 100,000
Investment in Soul 516,000 (516,000)
Land 50,000 100,000 150,000
Building 140,000 160,000 17,143 317,143
Equipment 570,000 330,000 20,000 920,000
Goodwill 35,000 35,000
Total assets P1,696,000 P850,000 P2,078,143

Accounts payable P200,000 P85,000 10,000 P275,000

Dividends payable 100,000 20,000 14,000 106,000
Other liabilities 50,000 95,000 145,000
Ordinary shares 1,000,000 500,000 500,000 1,000,000
Retained earnings,
346,000 150,000 346,000
end
Non-controlling
(206,143) 206,143
interest
Total Liabilities P1,696,000 P850,000 P2,078,143
and
Stockholder’s
equity
Case 4
Eliminating entries
Ordinary shares 150,000
Retained earnings 34,000
Investment in Sac 138,000
Non-controlling interest 46,000

Building 53,333
Investment in Sac 40,000
Non-controlling interest 13,333

Depreciation expenses 2,667

Building 2,667

Income from Sac 16,000

Dividends payable 6,000
Notes payable to Sac 5,000
Investment in Sac 16,000
Dividends receivable from Sac 6,000
Notes receivable from Pan 5,000

Investment in Sac 12,000

Non-controlling interest 4,000
Dividends 16,000

Share of NCI in subsidiary income 5,333

Non-controlling interest 5,333
a)
Consolidated
Elimination
Accounts Pan BV Sac BV Income
Debit (Credit)
Statement
Sales P400,000 P100,000 P500,000
Income from Sac 16,000 16,000 -
Cost of sales (250,000) (50,000) (300,000)
Other expenses (97,000) (26,000) (123,000)
Depreciation expense
2,667 (2,667)
Net income P69,000 P24,000 P74,333
Consolidated
Elimination Statement of
Accounts Pan BV Sac BV
Debit (Credit) Retained
earnings
Retained earnings,
P180,000 P34,000 34,000 P180,000
beg.
Net income 69,000 24,000 74,333
Dividends (50,000) (16,000) (16,000) (50,000)
Share of NCI in
5,333 (5,333)
subsidiary income
Retained earnings,
P199,000 P42,000 P199,000
end
Elimination Consolidated
Accounts Pan BV Sac BV
Debit (Credit) Balance Sheet
Cash P61,000 P15,000 P76,000
Accounts receivable 80,000 20,000 100,000
Dividends receivable
6,000 (6,000) -
from Sac
Notes receivable
5,000 (5,000) -
from Pan
Inventories 95,000 10,000 105,000
Investment in Sac 182,000 (182,000) -
Land 65,000 30,000 95,000
Building 170,000 80,000 50,666 300,666
Machinery 130,000 50,000 180,000
Total assets P 789,000 P210,000 P856,666
 Accounts payable P85,000 P10,000 P95,000
Dividends payable 8,000 6,000 2,000
Notes payable to
5,000 5,000 -
Sac
Ordinary shares 500,000 150,000 150,000 500,000
Retained earnings,
199,000 42,000 199,000
end
Non-controlling
(60,666) 60,666
interest
Total Liabilities P 789,000 P210,000 P856,666
and
Stockholder’s
equity

b) Consolidated net income = P74,333

NCI in net income = P5,333
Profit attributable to parent shareholders = P69,000
Consolidated retained earnings = P199,000
Consolidated shareholder’s equity = P759,66