Realized gain on sale of equipment downstream sales

Realized gain on sale of equipment (downstream sales) through
depreciation
25,0
00
P Company’s realized net income from separate operations…….….. P3,295,000
S Company’s net income from own
operations………………………………….
P820,000
Realized gain on sale of equipment (upstream sales) through depreciation 0
S Company’s realized net income from separate operations…….….. P 820,000 820,000
Total P4,115,000
Less: Non-controlling Interest in Net Income* * P 164,000
Amortization of allocated excess…………………… 0 164,000
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent………….. P3,951,000
Add: Non-controlling Interest in Net Income (NCINI) _169,000
Consolidated Net Income for 20x5 P4,115,000
**Non-controlling Interest in Net Income (NCINI) for 20x5
S Company’s net income of Subsidiary Company from its own
operations
(Reported net income of S Company)
P 820,000
Realized gain on sale of equipment (upstream sales) through depreciation 0
S Company’s realized net income from separate operations……… P 820,000
Less: Amortization of allocated excess 0
P820,000
Multiplied by: Non-controlling interest % .......... 20%
Non-controlling Interest in Net Income (NCINI) – partial goodwill P 164,000
B. Upstream Sale
1.
Cost Model – 20x5 (104,000/130,000 = 80% ownership)
Dividends – S Company
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
48,000
Dividend income (P60,000 x
80%) . . . . . . . . . . . . . . . . . . . . . . .
48,000
Net Income – S Company
No entry
Amortization of Allocated Excess
No entry
Unrealized Gain on Sale of Equipment
No entry
Realized Gain on Sale – depreciation
No entry
Equity Method – 20x5

Dividends – S Company
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
32,000
Investment in S Co (60,000 x 80%) . . . . . . . . . . . . . . . . . .
. . . . .
32,000
Net Income – S Company
Investment in S
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
656,000
Investment income (P820,000 x 80%). . . . . . . . . . . . . . . . .
. . . .
656,000
Amortization of Allocated Excess
None, since there is no amount available
Unrealized Gain on Sale of Equipment
No entry
1/1/20x4
Selling price……………………………………… P740,000
Less: Book value:
Cost…………………………………………P 1,280,000
Less: Accumulated depreciation
P1,280,000/8 years x 4 years……. 640,000 640,000
Unrealized gain on sales………………………. P 100,000
Realized gain on sale thru depreciation
based on remaining life of equipment
[P100,000 / (8 – 4, expired years)……… P 25,000
Realized Gain on Sale – depreciation 25,000
Investment in S
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment income (P25,000 x 100%). . . . . . . . . . . . . . . . .
. . . .
25,000
2. Working Paper Elimination Entries:
Cost Model
Equipment 540,000
Beginning R/E – Prince (P100,000 × .80) 80,000
Noncontrolling Interest (P100,000 × .20) 20,000
Accumulated Depreciation 640,000
Accumulated Depreciation (P100,000/4) × 2 50,000
Depreciation Expense 25,000
Beginning R/E – Prince (P25,000 × .80) 20,000
Noncontrolling Interest (P25,000 × .20) 5,000
Equity Method
Equipment 540,000
Investment in S Co. (P100,000 × .80) 80,000
Noncontrolling Interest (P100,000 × .20) 20,000

Accumulated Depreciation 640,000
Accumulated Depreciation (P100,000/4) × 2 50,000
Depreciation Expense 25,000
Investment in S Co. (P25,000 × .80) 20,000
Noncontrolling Interest (P25,000 × .20) 5,000
3 Controlling Interest in Consolidated Net Income:
Prince Company’s income from its
independent operations P3,270,000
Reported net income of Serf Company P820,000
Plus profit on intercompany sale of
equipment considered to be realized
through depreciation in 20x4 25,000
Reported subsidiary income that has been