CHAPTER 16 - CHAPTER 16 MULTIPLE CHOICE 16-1 16-2 16-3 16-4...

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CHAPTER 16 MULTIPLE CHOICE 16-1: c, [(P260,000/80%) x 20%] 16-2: d, consolidated net income will decrease by P6,000 due to amortization of the allocated excess (P60,000 / 10 years). 16-3: a, because there is no NCI in a wholly owned subsidiary. 16-4: c Investment cost (price paid) P500,000 Less: Book value of interest acquired 480,000 Excess P 60,000 Cost Method Equity Method Investment cost P500,000 P500,000 Parent’s share of subsidiary’s net income - 120,000 Dividends received from subsidiary - ( 48,000) Amortization of allocated excess (P60,000/20) - ( 3,000) Investment account balance, Dec. 31, 2009 P500,000 P569,000 16-5: a NCI, January 2, 2009 [(P270,000/75%) x 25%] P 90,000 NCI in S Company dividends [(P60,000/75%) x 25%] (16,000) NCI in S Company net income (P160,000 x 25%) 40,000 NCI balance, December 31, 2009 P114,000 16-6: a Puno’s net income P 145,000 Dividend income (P40,000 x 90%) ( 36,000) Puno’s net income from own operations 109,000 Salas’ net income from own operations 120,000 Consolidated net income P 229,000 16-7: b Peter’s net income from own operations P1,000,000 Seller’s net income from own operations 200,000 Consolidated net income 1,200,000 Attributable to NCI (P200,000 x 20%) 40,000 Attributable to parent P1,160,000 65
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16-8: a 2006 2007 2008 Investment in Son, Jan. 1 P310,000 P396,200 P512,400 Pop’s share of Son’s net income (100%) 150,000 180,000 200,000 Dividends received (100%) ( 60,000) (60,000) ( 60,000) Amortization of allocated excess to Equipment (P38,000 / 10) ( 3,800 ) ( 3,800 ) ( 3,800 ) Investment in Son, Dec. 31 P396,200 P512,400 P648,600 16-9: a Sy’s net income P300,000 Amortization of allocated excess ( 60,000) Adjusted net income of Sy P240,000 NCI in net income of subsidiary (P240,000 x 10%) P 24,000 16-10: a . Under the equity method consolidated retained earnings is equal to the retained earnings of the parent company. 16-11: c Retained earnings, Jan. 2, 2009 – Puzon P500,000 Consolidated net income attributable to parent: Net income – Puzon P200,000 Net income – Suarez 40,000 Dividend income (P20,000 x 80%) (16,000) NCI in Suarez net income (P40,000 x 20%) ( 8,000) 216,000 Dividends paid – Puzon ( 50,000) Consolidated retained earnings, Dec. 31, 2009 P666,000 16-12: c Price price P1,700,000 Less book value of interest acquired: 1,260,000 Excess P 440,000 Allocation due to undervaluation of net assets ( 40,000) Goodwill P 400,000 16-13: d NCI, January 2, 2009 [(P975,000/80%) x 20%] P243,750 NCI in subsidiary dividends (P125,000 x20%) (25,000) NCI in adjusted net of subisidiary (P190,000 – P10,000) x 20% 36,000 NCI, December 32, 2009 P182,750 66
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16-14: b Presto’s net income from own operations P140,000 Stork’s net income – March to December (P80,000 – P23,000) 57,000 NCI share in Stork’s net income (P57,000 x 10%) ( 5,700) Consolidated net income attributable to parent P191,300 16-15: b Investment in Siso Company (at date of acquisition) P600,000 Dividend income (P30,000 x 5%) P 1,500 16-16 d Consolidated net income: Pepe’s net income from own operations P210,000 Sison’s adjusted net income: Net income -2008 P67,000 Amortization of allocated excess to equipment (P20,000 / 5) 4,000 63,000 Consolidated net income P273,000 Consolidated retained earnings : Pepe’s retained earnings, Jan.2, 2008 P701,000 Consolidated net income attributable to parent– 2007 Pepe’s NI from own operations P185,000 Sison’s adjusted NI; Net income – 2008 P40,000 Amortization -2008 4,000 36,000 NCI in Sison’s net income (P36,000 x 30%) (10,800 ) 210,200 Dividends paid ,2008 - Pepe ( 50,000) Pepe’s retained earnings, Jan. 2, 2009 P861,200 Consolidated net income attributable to parent– 2009: Consolidated net income (see above) P273,000 NCI in Sison’s net income (P63,000 x 30%) ( 18,900 ) 254,100 Dividends paid, 2009 – Pepe ( 60,000 ) Consolidated retained earnings, Dec. 31, 2009 P1,055,300 16-17: a
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