Chapter 17

Multiple Choice Problems

58. a
**Non-controlling Interest in Net Income (NCINI) for 20x6
S Company’s net income of Subsidiary Company from its own operations
(Reported net income of S Company) P 0
Realized profit in beginning inventory of P Company (upstream sales) 0
Unrealized profit in ending inventory of P Company (upstream sales)
(P100,000 x 10% = P10,000 x 30%) ( 3,000)
S Company’s realized net income from separate operations……… P( 3,000)
Less: Amortization of allocated excess 0
P( 3,000)
Multiplied by: Non-controlling interest %.......... 10%
Non-controlling Interest in GP P(300)
Less: NCI on goodwill impairment loss on full goodwill 0
Non-controlling Interest in GP P( 300)
59. a
60. a Selling price P 60,000
Less: Cost of sales ( 48,000 )
Unrealized profit 12,000
Unsold fraction 1/3
Credit to Inventory P 4,000
61. a – the cost from parent of P48,000 x 45/60 = P36,000
Parent Subsidiary 1 Subsidiary 2
Sales 60,000 60,000 67,000
Less: Cost of goods sold – P and S1 48,000 60,000
Subsidiary (60,000 x 45/60) ______ ______ 45,000
Gross profit 12,000 0 22,000
Ending inventory (60,000 x 15/60) 15,000

62. b – the cost from parent of P48,000 x 15/60 = P12,000

63. a
Sales Cost of Sales
Intercompany
Parent 60,000 60,000
Subsidiary 1 60,000 45,000

Add: Cost of EI in S2 Co.

[P15,000 x (48/60] ________ __12,000
Amount to be eliminated 120,000 *117,000
*or, P60,000 + P60,000 – [P15,000 x (60-48/60]
64. b – refer to No. 63 for computation
65. d – P15,000 x [(60-48)/60] = P3,000
66. a
Consolidated Net Income for 20x3
P Company’s net income from own/separate operations P 225,000
Realized profit in beginning inventory of S Company (downstream sales) 0
Unrealized profit in ending inventory of S Company (downstream sales)… (_0)
P Company’s realized net income from separate operations*…….….. P225,000
S Company’s net income from own operations P150,000
Realized profit in beginning inventory of P Company (upstream sales) 0
Unrealized profit in ending inventory of P Company (upstream sales)
[P105,000 x 20/120) ( 17,500 )
S Company’s realized net income from separate operations*…….….. P132,500 132,500
Total P 357,500
Less: Amortization of allocated excess…………………… _0
Consolidated Net Income for 20x3 P357,500