3 Consolidated net income Osprey separate income not including Income from

3 consolidated net income osprey separate income not

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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

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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.
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

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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
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