Interest in Net Income NCINI partial goodwill P 10140 Subsidiary accounts are

Interest in net income ncini partial goodwill p 10140

This preview shows page 16 - 19 out of 102 pages.

Interest in Net Income (NCINI) – partial goodwill P 10,140 Subsidiary accounts are adjusted to full fair value regardless on the controlling interest percentage or what option used to value non-controlling interest or goodwill. Worksheet for Consolidated Financial Statements, December 31, 20x4. Cost Model (Partial-goodwill) 80%-Owned Subsidiary December 31, 20x4 (First Year after Acquisition) Income Statement P Co S Co. Dr. Cr. Consolidate d Sales P480,000 P240,000 P 720,000 Gain on sale of equipment 15,000 31,200 (5) 15,000 (6) 31,200 Dividend income 28,800 - (4) 28,800 _________ Total Revenue P523,800 P271,200 P 720,000 Cost of goods sold P204,000 P138,000 (3) 6,000 P 348,000 Depreciation expense 60,000 24,000 (3) 6,000 (7) 2,250 (8) 3,900 83,850 Interest expense - - (3) 1,200 1,200 Other expenses 48,000 18,000 66,000
Image of page 16

Subscribe to view the full document.

Goodwill impairment loss - - (3) 3,000 3,000 Total Cost and Expenses P312,000 P180,000 P 502,050 Net Income P211,800 P 91,200 P 217,950 NCI in Net Income - Subsidiary - - (9 10,140 ( 10,140) Net Income to Retained Earnings P211,800 P 91,200 P 207,810 Statement of Retained Earnings Retained earnings, 1/1 P Company P360,000 P 360,000 S Company P120,000 (1) 120,000 Net income, from above 211,800 91,200 207,810 Total P571,800 P211,200 P 567,810 Dividends paid P Company 72,000 72,000 S Company - 36,000 (4) 36,000 _ ________ Retained earnings, 12/31 to Balance Sheet P499,800 P175,200 P 495,810 Balance Sheet Cash………………………. P 232,800 P 90,000 P 322,800 Accounts receivable…….. 90,000 60,000 150,000 Inventory…………………. 120,000 90,000 (2) 6,000 3) 6,000 210,000 Land…………………………… . 210,000 48,000 (2) 7,200 265,200 Equipment 240,000 180,000 (5) 30,000 (6) 12,000 462,000 Buildings 720,000 540,000 (2) 216,000 1,044,000 Discount on bonds payable (2) 4,800 (3) 1,200 3,600 Goodwill…………………… (2) 12,000 (3) 3,000 9,000 Investment in S Co……… 372,000 (1) 288,000 (2) 84,000 - Total P1,984,80 0 P1,008,00 0 P2,466,600 Accumulated depreciation - equipment P 135,000 P 96,000 (3) 96,000 (7) 2,250 (8) 3,900 (3) 12,000 (5) 45,000 (6) 43,200 P229,050 Accumulated depreciation - buildings 405,000 288,000 (2) 192,000 (3) 6,000 495,000 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 (1) 240,000 Retained earnings, from above 499,800 175,200 495,810 Non-controlling interest………… _________ ______ ___ (4) 7,200 __________ (1 ) 72,000 (2) 18,000 (9) 10,140 ____92,940 Total P1,984,80 0 P1,008,00 0 P 834,450 P 834,450 P2,466,600
Image of page 17
20x5: Second Year after Acquisition P Co. S Co. Sales P 540,000 P 360,000 Less: Cost of goods sold 216,000 192,000 Gross profit P 324,000 P 168,000 Less: Depreciation expense 60,000 24,000 Other expense 72,000 54,000 Net income from its own separate operations P 192,000 P 90,000 Add: Dividend income 38,400 - Net income P 230,400 P 90,000 Dividends paid P 72,000 P 48,000 No goodwill impairment loss for 20x5. Parent Company Cost Model Entry Only a single entry is recorded by the parent in 20x5 in relation to its subsidiary investment: January 1, 20x5 – December 31, 20x5: Cash……………………… 38,400 Dividend income (P48,000 x 80%)……………. 38,400 Record dividends from S Company. On the books of S Company, the P48,000 dividend paid was recorded as follows: Dividends paid………… 48,000 Cash 48,000 Dividends paid by S Co.. Consolidation Workpaper – Second Year after Acquisition The working paper eliminations (in journal entry format) on December 31, 20x5, are as follows: (E1) Investment in S Company………………………… 44,160 Retained earnings – P Company……………………… 44,160 To provide entry to convert from the cost method to the equity method or the entry to establish reciprocity at the beginning of the year, 1/1/20x5, computed as follows: Retained earnings – S Company, 1/1/20x5 P175,200 Retained earnings – S Company, 1/1/20x4 120,000 Increase in retained earnings……..
Image of page 18

Subscribe to view the full document.

Image of page 19
  • Spring '16

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes