Cost of goods sold shipments from home office 250000

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Cost of goods sold: Shipments from home office 250,000 Inventory, 12/31 65,000 185,000
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Gross profit 40,500 Expenses 55,500 ( 15,000 ) Home Office account balance, 12/31 165,000 Number 56 Answer C Acquired from Home Office (80% x P30,000)/120% 20,000 Acquired from outsiders (20% x P30,000) 6,000 Branch inventory at cost, 12/31 26,000 Page 11 Number 57 Answer A Sales (74,000+22,000) 96,000 Cost of goods sold: Shipment from Home Office at cost (54,000/120%) 45,000 Purchases 26,000 Cost of goods available for sale 71,000 Inventory, at cost, 12/31 26,000 45,000 Gross profit 51,000 Expenses (38,000 + 12,000) 50,000 Branch net income insofar as Home Office is concerned 1,000 Number 58 Answer A Entity B (acquiree) Current assets 500,000 Noncurrent assets at fair value 1,300,000 Current liabilities at fair value ( 600,000) Noncurrent liabilities ( 500,000 ) Net assets of acquiree at fair value 700,000 Shares issued at fair value (10,000 x 20) 200,000 Bonds payable issued at fair (500,000 x 110%) 150,000 Total consideration 750,000 Net assets of acquiree at fair value 700,000 Goodwill 50,000 Number 59 Answer B Direct cost of business combination 40,000 Indirect cost of business combination 30,000 Total amount to be expensed as incurred 70,000 Number 60 Answer C Total assets of A at carrying amount: Current assets 1,000,000 Noncurrent assets 2,000,000 Total assets of B at fair value:
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Current assets 500,000 Noncurrent assets 1,300,000 Goodwill 50,000 Total consolidated assets 4,850,000 Payment for: Share issuance cost ( 10,000) Bond issue cost ( 20,000) Acquisition related cost ( 40,000) Indirect cost of combination ( 30,000 ) Total assets after business combination 4,750,000 Page 12 Number 61 Answer D Total liabilities of A at carrying amount: Current liabilities 200,000 Noncurrent liabilities 300,000 Total liabilities of B at fair value: Current liabilities 600,000 Noncurrent liabilities 500,000 Fair value of bonds payable issued (500,000 x 110%) 550,000 Bond issue cost ( 20,000 ) Total liabilities after combination 2,130,000 Number 62 Answer B Controlling interest (80,000/100,000) 80% Noncontrolling interest 20% Net assets of acquiree 1,600,000 Overvaluation of asset ( 60,000) Undervaluation of liability ( 40,000 ) Fair value of net assets of acquiree 1,500,000 Multiply by 20% Noncontrolling interest 300,000 Number 63 Answer D
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Net assets of acquiree at carrying amount 1,600,000 Overvaluation of asset ( 60,000) Undervaluation of liability ( 40,000 ) Net assets of acquiree at fair value 1,500,000 Acquisition price 1,000,000 Net assets acquired (80% x 1,500,000) 1,200,000 Gain on bargain purchase 200,000 Number 64 Answer A Existing interest (30,000 / 100,000) 30% Existing interest on 1/1/2018 90,000 Share in net income of associate for six months (30% x 40,000) 12,000 Carrying amount 102,000 Fair value of existing interest (30,000 x 4) 120,000 Gain on remeasurement 18,000 Number 65 Answer D Fair value of existing interest 120,000 Cost of additional interest 240,000 Fair value of noncontrolling interest 50,000 Total consideration 410,000 Fair value of net assets acquired ( 380,000) Goodwill 30,000 Net assets of acquiree at carrying amount 400,000 Overvaluation of asset ( 50,000) Overvaluation of liability 30,000 Fair value of net assets of acquiree 380,000 Page 13 Number 66 Answer D Initial measurement of noncontrolling interest in net assets (P330,000 x 30%) 99,000 Noncontrolling interest in net income 40,800 Dividends declared by Entity B for NCI owners (20,000 x 30%) ( 6,000) Noncontrolling interests in net assets on December 31, 2018 133,800 Net income reported by Entity B in its separate income statement 150,000 Amortization of undervaluation of machinery (80,000/4 years) ( 20,000)
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