3 Consolidated net income Osprey separate income not including Income from

3 consolidated net income osprey separate income not

This preview shows page 73 - 77 out of 102 pages.

3. Consolidated net income: Osprey separate income (not including Income from Branch)= P153,000 - P55,000 = P 98,000 Income from Branch 20,000 Plus: Deferred gain on land 50,000 Plus: Piecemeal recognition of gain on equipment sale: P35,000 gain/4 years = 8,750 Consolidated net income P176,750 Problem XVIII 1. Eliminating entry, December 31, 20x7: E(1) Gain on Sale of Land 10,000 Land 10,000 Eliminating entry, December 31, 20x8: E(1) Retained Earnings, January 1 10,000 Land 10,000 2. Eliminating entry, December 31, 20x7: E(1) Gain on Sale of Land 10,000 Land 10,000 Eliminating entry, December 31, 20x8: E(1) Retained Earnings, January 1 6,000
Image of page 73

Subscribe to view the full document.

Non-controlling Interest 4,000 Land 10,000 Problem XIX 1. Eliminating entry, December 31, 20x4: E(1) Gain on Sale of Land 45,000 Land 45,000 Eliminating entry, December 31, 20x5: E(1) Retained Earnings, January 1 31,500 Non-controlling Interest 13,500 Land 45,000 2. Eliminating entries, December 31, 20x4 and 20x5: E (1) Retained Earnings, January 1 30,000 Land 30,000 Multiple Choice Problems 1. a Combined equipment amounts P1,050,000 Less: gain on sale 25,000 Consolidated equipment balance P1,025,000 Combined Accumulated Depreciation P 250,000 Less: Depreciation on gain 5,000 Consolidated Accumulated Depreciation P 245,000 2. a Original cost of P1,100,000 Accumulated depreciation, 1/1/20x4 P 250,000 Add: Additional depreciation (P1,100,000 – P100,000) / 20 years ____50,000 Accumulated depreciation, 12/31/20x4 P 300,000 3. a Combined building amounts P650,000 Less: Intercompany gain __30,000 Consolidated buildings P620,000 Combined Accumulated Depreciation P195,000 Less: Piecemeal recognition of gain ___3,000 Consolidated accumulated depreciation P192,000 4. a – the amount of land that will be presented in the presented in the CFS is the original cost of P416,000 + P256,000 = P672,000.
Image of page 74
5. a The costs incurred by BB to develop the equipment are research and development costs and must be expensed as they are incurred. Transfer to another legal entity does not cause a change in accounting treatment within the economic entity. 6. e Original cost of P 100,000 Accumulated depreciation, 1/1/20x6 (P100,000 x 50%) P 50,000 Add: Additional depreciation (P100,000 – P50,000) / 5 years ___10,000 Accumulated depreciation, 12/31/20x6 P 60,000 7. d Sales price P 80,000 Less: Book value Cost P100,000 Less: Accumulated depreciation (50% x P100,000) __50,000 __50,000 Unrealized gain on sale P 30,000 Less: Realized gain - depreciation (P30,000 / 5 years) ___6,000 Net unrealized gain, 12/31/20x6 P 24,000 8. e Eliminating entries: 12/31/20x6: subsequent to date of acquisition Realized Gain – depreciation Accumulated depreciation 6,000 Depreciation expense 6,000 [P80,000 - (P100,000 - {P100,000 x 50%])] = P30,000 / 5 years or P15,000 – P8,000 = P7,000 “Should be in CFS” Parent – Pylux “Recorded as” Subsidiary - Sylux Depreciation expense (P50,000 /5 years) 10,000 Depreciation expense (P80,000 / 5 years) 16,000 Acc. Depreciation 8,000 Acc. depreciation 16,000 9. d 20x4 20x5 Unrealized gain on sales of equipment (downstream sales) ( 90,000) -0- Realized gain on sale of equipment (downstream sales) through depreciation P90,000 / 10 years ___9,000 9,000 Net ( 81,000) 9,000 10. d 20x4 20x5 Unrealized gain on sale of equipment (downstream sales) ( 150,000) -0- Realized gain on sale of equipment (downstream sales) through depreciation P150,000 / 10 years ___15,000 15,000 Net ( 135,000) 15,000 11. a
Image of page 75

Subscribe to view the full document.

20x4 20x5 Unrealized gain on sale of equipment (upstream sales) : 50,000 – 30,000 ( 20,000) -0- Realized gain on sale of equipment (upstream sales) through depreciation P20,000 / 5 years ___4,000 __4,000 Net ( 16,000) __4,000 12. e Original cost of P 100,000
Image of page 76
Image of page 77
  • 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