16000 Increase in Patents 20000 x 100 20000 36000 Positive Excess Goodwill

16000 increase in patents 20000 x 100 20000 36000

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16,000 Increase in Patents (20,000 x 100%) .......................................... 20,000 36,000 Positive Excess: Goodwill - partial 99,000 A summary or depreciation and amortization adjustments is as follows: Account Adjustments to be amortized Over/ Under Li fe Annu al Amou nt Curren t Year(20 x4) 20x5 Inventory P16,00 0 1 P 16,00 0 P 16,000 P - Subject to Annual Amortization Patents 20,000 10 2,000 2,000 ___2,0 00 Amortization P 18,00 0 P 18,000 P 2,000 Impairment of goodwill (full) 99,000 - _____ ___ ____ _ ___9,9 00 P 18,00 0 P 18,000 P 11,900 20x5 Consolidated Net Income for 20x5 Net income from own/separate operations Parent – Davis Company P120,00 0 Subsidiary - Martin Company 72,000
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Total P192,00 0 Less: Non-controlling Interest in Net Income* P 12,020 Amortization of allocated excess** 2,000 Goodwill impairment ___9,90 0 __23,920 Controlling Interest in Consolidated Net Income or Profit attributable to equity holders of parent………….. P168,08 0 Add: Non-controlling Interest in Net Income (NCINI) __12,020 Consolidated Net Income for 20x5 P180,10 0 *Net income of subsidiary – 20x5 P 72,000 Amortization of allocated excess – 20x5 ( 2,000 ) P70,000 Multiplied by: Non-controlling interest % .......... 20 % P 14,000 Less: Non-controlling interest on impairment loss on full- goodwill (P99,000 x 10% = P9,900 x 20%) ___1,98 0 Non-controlling Interest in Net Income (NCINI) P 12,020 *this procedure would be not be applicable where the NCI on goodwill impairment loss would not be proportionate to NCI acquired. 2. CI – CNI for 20x4, P133,600; CI – CNI for 20x5, P168,080 3. CRE, 12/31/20x5, P208,080 Correction: RE on January 1, 20x5 instead of December 31, 20x5. Retained earnings of P Co, 1/1/20x5, equity method (same with CRE) P 80,000
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Add; CI – CNI 168,080 P248,08 0 Less: Dividends of P Company __40,000 Retained Earnings of P Co., 12/31/20x4 under equity method P208,08 0 4. NCI, 12/31/20x5 Non-controlling interest, December 31, 20x5 Common stock – Martin Company, December 31, 20x5…… P 180,00 0 Retained earnings – Martin Company, December 31, 20x4 Retained earnings – Martin Company, January 1, 20x4 P 60,000 Add: NI of Martin for 20x4 and 20x5 (60,000 + 72,000) 132,000 Total P192,00 0 Less: Dividends paid – 20x4 and 20x5 (12,000 + 15,000) 27,000 165,0 00 Stockholders’ equity – S Company, December 31, 20x4 P 345,00 0 Adjustments to reflect fair value - (over) undervaluation of assets and liabilities, date of acquisition (January 1, 20x4) (20,000 + 16,000) 36,000 Amortization of allocated excess (refer to amortization above – 20x4 and 20x5 (P2,000 + 16,000 + 2,000) ( 20,0 00) Fair value of stockholders’ equity of S, P
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December 31, 20x5…… 361,00 0 Multiplied by: Non-controlling Interest percentage…………... 20 Non-controlling interest (partial-goodwill), 12/31/20x5……….. P 72,200 Add: Non-controlling interest on full goodwill , net of impairment loss, 12/31/x5:[(P99,000 full – P79,200, partial = P19,800) – (P99,000 x 10%, impairment loss x 20%) 17,820 Non-controlling interest (full-goodwill), 12/31/20x5…………….. P 90,020 5. Partial (80%) Full (100%) Goodwill balance, 1/1/20x4 79,200 99,000 Less Impairment – 20x4 ____-0- ____-0- Goodwill balance, 1/1/20x5 79,200 99,000 Less Impairment – 20x5 (99,000 x 10% = 9,900) _7,920 __9,900 Goodwill balance, 12/31/20x5 71,280 89,100 6. Patents, 1/1/20x4 20,000 Less: Amortization (20,000/10 years = 2,000 x 2) _4,000 Consolidated Patents, 12/31/20x5 16,000 Problem V 1. (Full or partial-goodwill) – the same answer.
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