Less Dividends of P Company 500 Consolidated Retained Earnings 123120x4 P

Less dividends of p company 500 consolidated retained

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Less: Dividends of P Company ____5,00 0 Consolidated Retained Earnings, 12/31/20x4 P 157,725 e. P238,000 5. Correction: Pill’s net income should be P87,725 instead of P86,725 a. P87,725 Consolidated Net Income for 20x4 Net income from own/separate operations Pill Company [P87,725 – (P40,000 x 85%) + (P1,500 x 85%)] P55,00 0 Sill Company 40,000 Total P95,00 0 Less: Non-controlling Interest in Net Income* P 5,775 Amortization of allocated excess 0 Goodwill impairment 1,500 __7,275 Controlling Interest in Consolidated Net Income or Profit attributable to equity holders of parent………….. P87,72 5 Add: Non-controlling Interest in Net Income (NCINI) __5,775
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Consolidated Net Income for 20x4 P93,50 0 b. P5,775 *Net income of subsidiary – 20x4 P 40,000 Amortization of allocated excess – 20x4 ( 0)) P 40,000 Multiplied by: Non-controlling interest % .......... _____15 % P 6,000 Less: Non-controlling interest on impairment loss on full- goodwill (P1,500 x 15%)* _____225 Non-controlling Interest in Net Income (NCINI) P 5,775 *this procedure would be not be applicable where the NCI on goodwill impairment loss would not be proportionate to NCI acquired. c. P93,500 – refer to computation in (a) d. d.1. P75,000. Retained earnings of Parent on the date of acquisition should always be the same with the Consolidated Retained Earnings also on the date of acquisition. d.2 Retained earnings of P Co, 1/1/20x4 P75,000 Add; Net income under equity method (given) _87,72 5 P162,72 5 Less: Dividends of P Company ___5,000 Retained Earnings of P Co., 12/31/20x4 under equity method P157,72 5 d.3 Retained earnings of P Co., (same with Consolidated RE), 1/1/20x4 P75,000 Add; Controlling Interest in CNI same with Net Income in d.2 above under
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equity method but not cost model _87,72 5 P162,72 5 Less: Dividends of P Company ___5,000 Consolidated Retained Earnings, 12/31/20x4 P157,72 5 e. P263,075 = P238,000 + (P40,000 x 85%) – (P9,000, div x 85%) – (P1,500, impair, x 85%) 5. Reconciliation of Investment balance – Cost Model to Equity Method Investment balance under cost model P 238,000 Retroactive adjustments: (Sill’s net income less dividends) Sill’s net income – 20x4 P 40,000 Less: Sill’s dividend – 20x4 ___9,000 Increase in retained earnings (NI less dividend) P 31,000 Less: Cumulative amortization of allocated excess _______ 0 P 31,000 X: Controlling interests ____85% P 26,350 Less: Impairment of goodwill (P1,500 x 85%) ___1,275 __25,075 Investment balance under equity method P263,07 5 Reconciliation of Retained Earnings – Cost Model to Equity Method Retained earnings, 12/31/20x4 under cost model(requirement 1 d.2) P 132,650 Retroactive adjustments: (Sill’s net income less
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dividends) Sill’s net income – 20x4 P 40,000 Less: Sill’s dividend – 20x4 ___9,000 Increase in retained earnings (NI less dividend) P 31,000 Less: Cumulative amortization of allocated excess _______ 0 P 31,000 X: Controlling interests ____85% P 26,350 Less: Impairment of goodwill (P1,500 x 85%) ___1,275 __25,075 Retained earnings, 12/31/20x4 under equity method(requirement 2 d.2) P157,72 5 Problem III Cost of 85% investment 646,000 Fair value of Subsidiary (Implied cost of 100% investment); P646,000/85% 760,000 Less: Carrying amount of Silk’s net assets = Carrying amount of Silk’s shareholders’ equity Common/Ordinary shares 500,000 Retained earnings 100,000 600,000 Allocated Excess: Acquisition differential – December 31, 20x4 160,000 Less: Over/under valuation of A/L (Allocated to): Increase in Inventory 70,000 Patents 90,000 Non-controlling
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