Add deduct Over under valuation of assets and liabilities P90000 x 100 90000

Add deduct over under valuation of assets and

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Add (deduct): (Over) under valuation of assets and liabilities (P90,000 x 100%) 90,000 Positive excess: Full-goodwill (excess of cost over fair value)………………………………………………... P 15,000 In this case, the goodwill was proportional to the controlling interest of 80% and non-controlling interest of 20% computed as follows: Value % of Total Goodwill applicable to parent………………… P12,000 80.00% Goodwill applicable to NCI…………………….. 3,000 20.00% Total (full) goodwill……………………………….. P15,000 100.00% The goodwill impairment loss would be allocated as follows Value % of Total Goodwill impairment loss attributable to parent or controlling Interest P 3,000 80.00% Goodwill applicable to NCI…………………….. 750 20.00% Goodwill impairment loss based on 100% fair value or full- Goodwill P 3,750 100.00% The unrealized and gain on intercompany sales for 20x4 are as follows: Date Selling Book Unrealized* Remainin Realized gain –
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of Sale Seller Price Value Gain on sale g Life depreciation** 20x4 4/1/20x 4 P Co. P90,00 0 P75,00 0 P15,000 5 years P3,000/year P2,25 0 1/2/20x 4 S Co. 60,00 0 28,80 0 31,200 8 years P3,900/year P3,90 0 * selling price less book value ** unrealized gain divided by remaining life; 20x4 – P3,000 x 9/12 = P2,250 20x4: First Year after Acquisition Parent Company Cost Model Entry January 1, 20x4: (1) Investment in S Company…………………………………………… 372,000 Cash…………………………………………………………… ……….. 372,000 Acquisition of S Company. January 1, 20x4 – December 31, 20x4: (2) Cash……………………… 28,800 Dividend income (P36,000 x 80%)……………. 28,800 Record dividends from S Company. No entries are made on the parent’s books to depreciate, amortize or write-off the portion of the allocated excess that expires during 20x4, and unrealized profits in ending inventory. Consolidation Workpaper – Year of Acquisition (E1) Common stock S Co………………………………………… 240,000 Retained earnings – S Co…………………………………… 120.000 Investment in S Co…………………………………………… 288,000 Non-controlling interest (P360,000 x 20%) ……………………….. 72,000 To eliminate intercompany investment and equity accounts of subsidiary on date of acquisition; and to establish non- controlling interest (in net assets of subsidiary) on date of acquisition. (E2) Inventory…………………………………………………………………. 6,000 Accumulated depreciation – equipment……………….. 96,000 Accumulated depreciation – buildings………………….. 192,000 Land………………………………………………………………… ……. 7,200 Discount on bonds payable…………………………………………. 4,800 Goodwill…………………………………………………………… …….
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