PROBLEM 1.

On January 1, 2022, Pintados acquired 80% of Swarm Inc. for P1,000,000. The net assets of
Swarm on January 1, 2022 amounted to P800,000. On that date, the inventory and equipment
had fair values P120,000 and 320,000 in excess of the book values, respectively. The estimated
remaining life of equipment was five years.

On December 31, 2022, Swarm reported net income and dividends of P300,000 and P100,000,
respectively and the 2023 net income and dividend were P360,000 and P200,000, respectively.
Pintados opted to use the fair value to measure the non-controlling interest.

1. What is the amount of investment in the subsidiary on December 31, 2023, using the equity
method in the book of pintados?
2. What is the investment income on December 31, 2023 using the cost method in the books of
Pintados?
3. What is the investment income on December 31, 2023 using the equity method in the books
of Pintados?
4. What is the non-controlling interest in net income on December 31, 2023?
5. What is the non-controlling interest in net assets on December 31, 2023?

PROBLEM 2.
On January 1, 2021, Anton Corp. acquired 80% interest in John Company for P1,600,000. On
this date, John's ordinary shares and retained earnings were P1,000,000 and P500,000. The
book value of assets and liabilities approximate its fair values except for an undervalued
inventory of P120,000 and undervalued equipment of P80,000 (remaining life of 5 years). Anton
measures the non-controlling interest at NCI proportionate share basis.

During 2021, Anton sold goods to John costing P150,000 for P200,000. 80% of these
inventories were sold in 2021 while the remaining balance were sold in 2022. The net income
reported by Anton and John were P600,000 and P250,000, respectively. Anton declared
dividends amounting to P400,000 while John paid dividends amounting to P150,000. On
December 31, 2021, it was determined that the goodwill is impaired by P60,000.

During 2022, John sold goods to Anton for P120,000 with a gross profit of 20%. P52,000
remained in Anton's inventory on December 31, 2022. The net income reported by Anton and
John were P800,000 and P400,000, respectively. Anton declared paid amounting to P600,000
while John paid P200,000 dividends to Anton. The goodwill is not impaired in the year 2022.

6. What is the amount of non-controlling interest in net income on December 31, 2021?
7. What is the consolidated net income attributable to parent on December 31, 2021?
8. What is the amount of non-controlling interest on December 31, 2021?
9. What is the amount of non-controlling interest in net income on December 31, 2022?
10. What is the consolidated net income attributable to parent on December 31, 2022?

PROBLEM 3.
On January 1, 2021, Pol acquired 75% interest in Sol Company for P900,000. On that date the
book value of assets and liabilities of Sol Company amounting to P1,100,000 approximates its
fair
value except for an overvalued inventory amounting to P10,000 and an undervalued equipment
amounting to P15,000. The equipment has a remaining life of 5 years on the date of acquisition.
Pol Corp measured the NCI at fair value.
During 2021, Pol Corp acquired inventory from Sol Company for P100,000 costing P80,000. On
December 31, 2021, 80% of the inventory acquired from Sol Company were sold for P120,000.
The separate income statements of Pol and Sol Company from their own operations are as
follows:

Pol Sol
Sales 600,000 250,000
Less: Cost of goods sold 300,000 100,000
Gross profit 300,000 150,000
Less: Operating expenses 50,000 20,000
Net income 250,000 130,000

On December 31, 2021, Pol declared a P100,000 dividend while Sol Company paid a dividend
to Pol Corp. amounting to P60,000. The goodwill is impaired by P20,000.

11. What is the amount of non-controlling interest in net income of the subsidiary?
12. What is the amount of non-controlling interest in the net assets of a subsidiary?
13. What is the amount of consolidated net income attributable to the parent?
14. What is the amount of investment income the under equity method?
15. What is the consolidated cost of goods sold?

PROBLEM 4.
On January 2, 2020, Pam acquired 80% of the ordinary shares of Sam at book value. On
January 1, 2021, Pam sold equipment to Sam for P360,000 with a book value of P270,000. The
estimated remaining life of the equipment is six years and depreciated using the straight-line
method.

On December 31, 2021, Pam and Sam reported net income of P400,000 and P300,000.

16. What is the non-controlling interest in net income for 2021?

17. What is the consolidated net income for 2021?
18. What is the book value of the equipment on December 31, 2021?

PROBLEM 5.
On January 1, 2020, Mark Corp. acquires 70% of the outstanding ordinary shares of Prof
Company at book value. On January 1, 2021, Prof purchase a machine with an estimated life of
10 years.
On January 1, 2023, Prof sold the machine to Mark Corp. Mark Company recorded this entry to
account the intercompany sale in its separate set of books.

Cash 890,000
Accumulated Depreciation 160,000
Equipment 800,000
Gain on Sale of Equipment 250,000
On December 31, 2023, Mark and Prof reported net income of P950,000 and P500,000,
respectively. Mark and Prof also declared dividends amounting to P600,000 and P300,000,
respectively.

19. What is the consolidated net income attributable to controlling interest?

20. What is the amount of depreciation expense reported by Mark Company?

PROBLEM 6.
On January 1, 2021, Pine Corp acquired 75% interest in Sine Inc. for P2,400,000. On that date
SSine’sOrdinary share and Retained earnings were P2,000,000 and P1,000,000. The non-
controlling interest on the date of acquisition was P800,000. The assets and liabilities of Sine's
book values approximate their fair values except for the inventories and equipment which were
undervalued by P30,000 and P50,000, respectively. The equipment has a remaining estimated
life of five years.

On October 1, 2021, Sine Inc. sold equipment to Pine Corp. costing P300,000 with accumulated
depreciation of P120,000 for P200,000. The remaining useful life of the equipment was 4 years.
In the year 2021, the goodwill is impaired by P5,000.

On April 30, 2022, Pine Corp. sold equipment to Sine Inc, costing P500,000 with accumulated
depreciation of P100,000 for P300,000. The remaining estimated life of the equipment was five
years.

The following information was extracted from the separate financial statements of Pine and Sine
for 2021 and 2022:
Pine Sine
Year
Net income Dividend Net income Dividend
2021 800,000 600,000 350,000 150,000
2022 1,000,000 750,000 500,000 350,000

21. What is the amount of non-controlling interest in net income for 2022?
22. What is the amount of non-controlling interest in net assets for 2022?
23. What is the amount of consolidated net income attributable to controlling interest in 2021?
24. What is the amount of consolidated net income attributable to controlling interest in 2022?
25. What is the amount of investment in Sine in year 2022 using equity method?