Question 1

Luzon Company purchased 80% of Visayas Company's outstanding common stock for P260,000, P60,000
above the underlying book value on January 2, 2021. The fair value of Visayas' net assets approximated book
value. On December 31, 2021, consolidated financial statement, non-controlling interest (NCI) should be
reported at:

 65,000
 75,000
 60,000
 42,000

Question 2
Pepsi, Inc. purchased 80% of Coke Company's voting common stock for P260,000, P60,000 above the
underlying book value on January 4, 2021. Any excess is amortized over 10 years. What is the effect of the
excess on the 2021 consolidated income?

 increase of 6,000
 decrease of P6,000
 increase of 12,000
 decrease of 18,000

Question 3
On January 4, 2021, Patton Corporation acquired 75% of the outstanding common stock of Rommel Company
for P270,000 cash. Rommel Company's income for the year ended December 31, 2021, was P160,000. During
the year 2021, Patton Corporation received P60,000 cash dividends from Rommel Company. There were no
other inter-company transactions. The balance of the non-controlling (NCI) account on December 31, 2021 is:

 55,000
 20,000
 114,000
 106,250
Question 4
On January 4, 2021, Saul Co. acquired 80% of James's outstanding common stock for P 500,000. James'
book value on that date was P500,000; there was no significant difference between the market and book value
of James' net assets. Goodwill, if any, is not impaired. In 2021, Saul Co. and James reported the following:
Saul Co. James
Income from its own operations 1,000,000 200,000
Dividends declared and paid 300,000 120,000
The consolidated income attributable to parent for 2021 is:

 1,150,000
 1,143,750
 1,146,875
 1,160,000
Question 5
For the year ended February 28, 2021, Sia Company, the 90% owned purchased subsidiary of Nah
Corporation, declared a dividend of P100,000 and had an income of P300,000. Also for that year, the
amortization of the current fair value differences of Sia Company's identifiable net assets was P60,000. The
balance of NCI in income of subsidiary account on February 28, 2021, is:

 24,900
 20,000
 24,000
 21,000

Question 6
On January 4, 2021, Cebu Corporation purchased an 80% investment in Talisay Company. The purchase
price was equal to Cebu's equity in Talisay's net assets at that date. On January 4, 2021, Cebu and Talisay
had retained earnings of P500,000 and P100,000, respectively. In 2021, Cebu had an income of P200,000,
which included its equity in Talisay's dividends and declared dividends of P50,000. Talisay had an income of
P40,000 and declared dividends of P20,000 and there were no other intercompany transactions. On December
31, 2021, the consolidated retained earnings should be:

 674,000
 770,000
 650,000
 666,000

Question 7
On April 1, 2021, Palo, Inc. paid P1,700,000 for all the issued and outstanding common stock of Dulag
Corporation. On that date, the total cost and the fair value of Dulag Corporation's net assets are P1,260,000
and P1,300,000, respectively. In Palo Inc.'s March 31, 2021, consolidated statement of financial position, what
is the amount of goodwill that should be reported as a result of this business combination?

 390,000
 400,000
 380,000
 429,000

Question 8
Magnolia Corporation purchased 90% of the outstanding stock of Presto Company on March 21, 2021, at book
value. Presto Company reported an income of P80,000 for the year 2021 and paid no dividends. Prior to the
acquisition by Magnolia Corporation, Presto Company had 2021 revenues of P95,000 and expenses of
P72,000. Magnolia Corporation reported an income of P140,000 from its own operations in 2021. Consolidated
income attributable to parent for 2021 is:

 197,000
 191.300
 212,000
 154,400
For Questions 9-12
Pilar Corporation purchased 70% of Pepe Company's ownership on January 4, 2021, and paid P231,000. At
that date, Pepe reported the book value of its net assets as P280,000. The purchase difference is allocated to
depreciable assets with a remaining life of 10 years. The companies reported the following data for 2022:

Retained Earnings 2022 Income 2022 Dividends

Pilar Corporation 520,000 120,000 50,000
Pepe Company 230,000 25,000 10,000

The following entry was included in the eliminating entries used to prepare the consolidated financial statement
on December 31, 2022:
Retained Earnings, 1/1- Pepe Company 21,000
Non-Controlling Interest 21,000

Question 9
What amount of retained earnings did Pepe Company report on January 1, 2021?

 155,000
 165,000
 160,000
 170,000
Question 10
What amount should be reported as consolidated retained earnings on January 1, 2022?

 574,000
 590,000
 750,000
 569,000
Question 11
What amount should be reported as a consolidated income for 2022?

 145,000
 138,000
 140,000
 133,000
Question 12
What amount should be reported as consolidated retained earnings on December 31, 2022?

 696,000
 652,000
 690,000
 646,000
Quiz 5
Question 1
On January 1, 2021, Parent Company sold equipment to Subsi Company, its wholly-owned subsidiary for
P400,000. The equipment had a cost of P600,000; the accumulated depreciation at the time of sale was
P360,000. The parent used a 10-year life, no salvage value, and straight-line depreciation. Subsi Company will
continue this practice.

On the consolidated statement of financial position on December 31, 2021, the cost and accumulated
depreciation of the equipment should be stated at:

 400,000 and 60,000

 600,000 and 420,000
 360,000 and 60,000
 400,000 and 100,000

Question 2
Below are the relevant data for Puro and Salo Companies for the years 2020 and 2021:

Journal entry to record intercompany sale of land:

Cash 70,000
Land 40,000
Gain on sale of land 30,000

The income from operations for Puro Company amounted to P200,000 and P250,000 for the years 2020 and
2021, respectively, while that of Salo Company showed an income of P100,000 and P150,000 for the years
2020 and 2021, respectively.

Puro owns 80% of Salo, acquired several years ago at book value. The land sold intercompany in the year
2018 was not resold to outsiders.
The consolidated income for 2020 and 2021 should be reported at:

 262,000 and 346,000, respectively

 250,000 and 370,000 respectively
 270,000 and 400,000 respectively
 250,000 and 340,000, respectively

Question 3
On January 1, 2021, Paul Corporation sold equipment to Saul Company, its wholly-owned subsidiary, for
P680,000. Paul paid P1,000,000 for this equipment for which the depreciation to date of intercompany sale
totaled P360,000. Both companies use the straight-line method of depreciation for their depreciable assets.
The equipment had a 10-year life when purchased and an expected salvage of P100,000.

What amount should be included in the consolidated statement of financial position at December 31, 2021, for
the equipment cost and accumulated depreciation?

 680,000 and 360,000

 1,000,000 and 450,000
 680,000 and 450,000
 1,000,000 and 360,000

Question 4
Pol, Inc. owns 75% of See Company, purchased several years ago at book value. On July 1, 2021, See sold
Pol a used computer at a loss of P12,000. The computer has a 5-year life from the date of the intercompany
sale, straight-line depreciation will be used, and it has no salvage value. In the year 2021, See had an income
of P100,000 and paid a dividend of P60,000.
The NCI in the income of the subsidiary for 2021 is:

 28,300
 21,700
 27,700
 22,300