E8 Accumulated depreciation 5250 Depreciation expense current year 3000

E8 accumulated depreciation 5250 depreciation expense

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(E8) Accumulated depreciation……….. 5,250 Depreciation expense (current year)…………… 3,000 Retained Earnings–P Company, 1/1/20x5 (prior year) 2,250 To adjust downstream depreciation expense on equipment sold to subsidiary, thus realizing a portion of the gain through depreciation (E9) Accumulated depreciation……….. 7,800 Depreciation expense (current year) 3,900 Retained Earnings–P Co. 1/1/20x5 (P3,900 x 80%) 3,120 Non-controlling interest (P3,900 x 20%) 780 To adjust upstream depreciation expense on equipment sold to parent, thus realizing a portion of the gain through depreciation (P31,200/85 years x 1 year = P3,900). (E10) Non-controlling interest in Net Income of Subsidiary………… 17,340 Non-controlling interest ………….. 17,340 To establish non-controlling interest in subsidiary’s adjusted net income for 20x5 as follows: Net income of subsidiary…………………….. P 90,000 Realized gain on sale of equipment (upstream sales) through depreciation 3,900 S Company’s Realized net income* P 93,900 Less: Amortization of allocated excess ( 7,200) P 86,700 Multiplied by: Non-controlling interest % .......... 20 % Non-controlling Interest in Net Income (NCINI P 17,340 Less: NCI on goodwill impairment loss on full- Goodwill 0 Non-controlling Interest in Net Income (NCINI) P 17,340 *from separate transactions that has been realized in transactions with third persons. Worksheet for Consolidated Financial Statements, December 31, 20x5. Cost Model (Full-goodwill) 80%-Owned Subsidiary
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December 31, 20x5 (Second Year after Acquisition) Income Statement P Co S Co. Dr. Cr. Consolidate d Sales P540,000 P360,00 0 P 900,000 Dividend income 38,400 - (5) 38,400 _________ __ Total Revenue P578,400 P360,00 0 P 900,000 Cost of goods sold P216,000 P192,00 0 P 408,000 Depreciation expense 60,000 24,000 (4) 6,000 (8) 3,000 (9) 3,900 83,100 Interest expense - - (4) 1,200 1,200 Other expenses 72,000 54,000 126,000 Goodwill impairment loss - - - Total Cost and Expenses P348,000 P270,00 0 P 618,300 Net Income P230,400 P 90,000 P 281,700 NCI in Net Income - Subsidiary - - (10) 17,340 ( 17,340) Net Income to Retained Earnings P230,400 P 90,000 P 264,360 Statement of Retained Earnings Retained earnings, 1/1 P Company P499,800 (2) 13,560 (6) 15,00 (7) 24,960 (1) 44,160 (8) 2,250 (9) 3,120 P 495,810 S Company P 175,200 (1) 175,200 Net income, from above 230,400 90,000 264,360 Total P730,200 P265,20 0 P 760,170 Dividends paid P Company 72,000 72,000 S Company - 48,00 0 (5) 48,000 _ ________ Retained earnings, 12/31 to Balance Sheet P658,200 P217,20 0 P 688,170 Balance Sheet Cash………………………. P 265,200 P 102,000 P 367,200 Accounts receivable…….. 180,000 96,000 276,000 Inventory…………………. 216,000 108,000 (3) 6,000 (4) 6,000 324,000 Land……………………………. 210,000 48,000 (3) 7,200 265,200 Equipment 240,000 180,000 (6) 462,000
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30,000 (7) 12,000 Buildings 720,000 540,000 (3) 216,000 1,044,000 Discount on bonds payable (3) 4,800 (4) 2,400 2,400 Goodwill…………………… (3) 15,000 (4) 3,750 11,250 Investment in S Co……… 372,000 (1) 44,160 (2) 332,160 (3) 90,000 - Total P2,203,200 P1,074,0 00 P2,752,050 Accumulated depreciation - equipment P 150,000 P 102,000 (3) 96,000 (8) 5,250 (9) 7,800 (4) 24,000 (6) 45,000 (7) 43,200 P 255,150 Accumulated depreciation - buildings 450,000 306,000 (3) 192,000 (4) 12,000 552,000 Accounts payable…………… 105,000 88,800 193,800 Bonds payable………………… 240,000 120,000 360,000 Common stock, P10 par……… 600,000 600,000 Common stock, P10 par……… 240,000 (2) 240,000 Retained earnings, from above 658,200 217,200 688,170 Non-controlling interest………… ___ _____ ____ _____ (4) 3,390 (5) 9,600 (7) 6,240 _________ _ (2 ) 83,040 (3) 21,000 (9) 780 (10) 17,340 ____102,93 0 Total P2,203,200 P1,074,0 00 P 983,100 P 983,100 P2,752,050 5. 1/1/20x4 a. On date of acquisition the retained earnings of parent should always be considered as the consolidated retained earnings, thus: Consolidated Retained Earnings, January 1, 20x4
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