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Chapter 16 - Inter-Company Profit Transactions - Inventories Chapter 16 - Inter-Company Profit Transactions - Inventories
Chapter 16 - Inter-Company Profit Transactions - Inventories Chapter 16 - Inter-Company Profit Transactions - Inventories
CHAPTER 16
16-1: b
Consolidated sales
Sales – Papa P 900,000
Sales – San 500,000
Elimination of inter-company sales ( 50,000)
Consolidated sales P 1,350,000
16-2: c
16-3: d
16-4: b
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16-5: d
CI from own operation – Puzon P 200,000
Suazon’s adjusted CI from own operations:
CI P110,000
Unrealized profit in ending inventory-
Upstream (P25,000 x 40%) ( 10,000) 100,000
Consolidated CI P 300,000
Attributable to NCI (P100,000 x 25%) (25.000)
Attributable to parent P 275,000
16-6: b
2016 2017
CI from own operation – Pat P 500,000 P 550,000
Unrealized profit in ending inventory:
2016 (P20,000 x .40) (8,000)
2017 (P30,000 x .50) (15,000)
Realized profit in beginning inventory 8,000
Realized CI 492,000 543,000
Sun CI 200,000 225,000
Consolidated CI P 692,000 P 768,000
16-7: a
16-8: a
CI from own operations – Popo P 500,000
Unrealized profit in ending inventory – Downstream ( 15,000)
Realized CI from own operation – Popo P 485,000
Adjusted CI from own operations - Sotto
CI P 360,000
Realized profit in beginning inventory-
Upstream 10,000 370,000
Consolidated CI P 855,000
Attributable to NCI (P370,000 x 5%) 18,500
Attributable to parent P 836,500
16-9: d
CI – Sand Company P200,000
Realized profit in beg. Inventory (P120,000 x .20) 24,000
Unrealized profit in ending inventory (P360,000 x .20) (72,000)
Amortization of allocated excess P1.000,000 / 5) (200,000)
Adjusted net loss – Sand Company P(48,000)
NCI (P48,000 x 40%) P(19,200)
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16-10: b
16-11: b
Consolidated CI
CI from own operations – Pig P 200,000
Sir’s adjusted CI:
CI P 80,000
Realized profit in beginning inventory 21,000
Unrealized profit in ending inventory (18,000) 83,000
Consolidated CI 283,000
Attributable to NCI (P83,000 x 10%) (8,300)
Attributable to parent P 274,700
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16-12: a
2015 2016 2017
Pal Corp CI 150,000 240,000 300,000
Intercompany profit in ending inventory:
2015 (14,000) 14,000
2016 (21,000) 21,000
2017 ( 24,000)
Pal CI from own operation 136,000 233,000 297,000
Solo CI from own operation 100,000 90,000 160,000
Consolidated CI 236,000 323,000 427,000
Attributable to NCI
2015(100,000 – 14,000) x 40% 34,400
2016(90,000 +14,000 – 21,000) 40% 33,200
2017(160,000 + 21,000 – 24,000) 40% 62,800
Attributable to Parent 201,600 289,800 394,200
16-13: a
16-14: 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
16-15: c
Polo Corp. CI 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. CI from own operation 78,000
Star Corp. CI from own operation:
CI 45,000
Unrealized profit in EI-US (20,000 x 30/80) (7,500)
Amortization (20,000/10 years) (2,000) 35,500
Consolidated CI 113,500
Attributable to NCI (35,500 x 40%) (14,200)
Attributable to Parent 99,300
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16-16: a
16-17: a
Inventory-Pepsi P 30,000
Less: unrealized profit in books of Sarsi:
(135,000 – 90,000) x (30,000/135,000) (10,000) 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 12/31/17 75,000
16-18: a
16-19: b
Pepsi CI 220,000
Sarsi CI 85,000
Realized profit in beginning inventory - 2015 15,000
Unrealized profit in ending inventory- Sarsi (10,000)
Unrealized profit in ending inventory- Pepsi (55,000)
Consolidated CI – 2017 255,000
16-20: b
CI from own operations – P Company P200,000
S Co. adjusted CI:
CI – S P30,000
Unrealized profit in ending inventory –
Upstream (P9,000 x 50/150) (3,000)
Realized profit in beginning inventory-
Upstream (P6,000 x 50/150) 2,000 29,000
Consolidated CI 229,000
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16-21: b
16-22: c
S Company:
Sales P416,000
Cost of goods sold (P400,000 x 80%) P320,000
Add write down of ending inventory 10,000 330,000
Gross profit P 86,000
16-23: a
Sales P416,000
Consolidated cost of goods sold 256,000*
Gross profit P160,000
16-24: a
Supporting computations:
(1) Sales:
Pablo Company P220,000
Sally Company 120,000
Intercompany sales (70,000)
Consolidated sales P270,000
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PROBLEMS
Problem 16-1
The computation of the selected consolidation balances are affected by the inter-company profit
in downstream intercompany sales as computed below:
a. Consolidated Sales
Apo P800,000
Bicol 600,000
Intercompany sales – 2017 (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-2017 (250,000)
Realized profit in beginning inventory – 2017 ( 14,400)
Unrealized profit in ending inventory – 2017 10,000
Consolidated cost of goods sold P 680,600
c. Operating expenses
Apo P 100,000
Bicol 100,000
Total P 200,000
f. Inventory
Apo P 298,000
Bicol 700,000
Unrealized profit in ending inventory, Dec. 31, 2017 (10,000)
Consolidated inventory P 988,000
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Problem 16-2
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%) 19,000
Total P 204,000
Cost of sales – S Company 500,000
Consolidated cost of sales P 704,000
Schedule 2:
CI – S Company P 180,000
Realized profit in beginning inventory – Upstream 15,000
Unrealized profit in ending inventory – Upstream (19,000)
Adjusted CI P 176,000
NCI proportionate share x 25%
NCI in CI of subsidiary P 44,000
Problem 16-3
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b. Consolidated CI
P Company CI from own operations (P250,000 – P32,000) P 218,000
S Company adjusted CI 45,000
Consolidated CI P 263,000
c. Non-controlling Interest
NCI, August 30, 2017 [(P248,000/80%) x 20%] P 62,000
NCI in subsidiary dividends [(P32,000/80%) x 20%] ( 8,000)
NCI in CI of subsidiary 9,000
NCI P 63,000
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Problem 16-4
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
Downstream Sales
Sales 140,000
Inventory (P42,000 x 40/140) 12,000
Cost of goods sold 128,000
Upstream Sales
Sales 240,000
Inventory (P48,000 x 20/120) 8,000
Cost of goods sold 232,000
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Problem 16-5
Statement of CI
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
Statement of Retained
Earnings
Retained earnings, January 1 5,500,000 2,200,000 (2)2,200,000 5,500,000
CI 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
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Problem 16-6
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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
CI 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) 1,320
(10) 750 387,930
Pant assets (net) 1,991,000 340,000 2,331,000
Investment in S Company 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
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CI of So Company P45,000
Realized profit in beginning inventory (upstream) 700
Unrealized profit in ending inventory (upstream) (750)
Adjusted CI P44,950
NCI share 20%
NCI in CI of subsidiary P 8,990
(2)
Po Company and Subsidiary So Company
Consolidated Statement of Comprehensive Income
Fiscal Year Ended March 31, 2017
Sales P1,448,000
Cost of goods sold 1,146,020
Gross profit 301,980
Expenses 211,000
Consolidated CI P 90,980
Attributable to NCI 8,990
Attributable to controlling interest P 81,990
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