Company 3720 00 Cash 3720 00 Acquisition of S Company January 1 20x4 December

Company 3720 00 cash 3720 00 acquisition of s company

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Company…………………………………………… 372,0 00 Cash…………………………………………… ……………………….. 372,0 00 Acquisition of S Company. January 1, 20x4 – December 31, 20x4: (2) Cash……………………… 28,80 0 Dividend income (P36,000 x 80%) ……………. 28,80 0 Record dividends from S Company. On the books of S Company, the P30,000 dividend paid was recorded as follows: Dividends paid………… 36,000 Cash……. 36,000 Dividends paid by S Co.. Consolidation Workpaper – Year of Acquisition (E1) Common stock S 240,000
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Co………………………………………… Retained earnings – S Co…………………………………… 120.000 Investment in S Co…………………………………………… 288,000 Non-controlling interest (P360,000 x 20%)……………………….. 72,000 To eliminate intercompany investment and equity accounts of subsidiary on date of acquisition; and to establish non-controlling interest (in net assets of subsidiary) on date of acquisition. (E2) Inventory…………………………………………… ……………………. 6,000 Accumulated depreciation – equipment……………….. 96,00 0 Accumulated depreciation – buildings………………….. 192,0 00 Land…………………………………………… …………………………. 7,200 Discount on bonds payable…………………………………………. 4,800 Goodwill………………………………………… ………………………. 12,00 0 Buildings…………………………………… ….. 216,0 00 Non-controlling interest (P90,000 x 20%) ……………………….. 18,00 0 Investment in S Co………………………………………………. 84,00 0 To allocate excess of cost over book value of identifiable assets acquired, with remainder to goodwill; and to establish non-
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controlling interest (in net assets of subsidiary) on date of acquisition. (E3) Cost of Goods Sold……………. 6,00 0 Depreciation expense……………………….. 6,00 0 Accumulated depreciation – buildings………………….. 6,00 0 Interest expense………………………………… 1,20 0 Goodwill impairment loss………………………………………. 3,00 0 Inventory……………………………………… ………………….. 6,000 Accumulated depreciation – equipment……………….. 12,00 0 Discount on bonds payable………………………… 1,200 Goodwill…………………………………… 3,00 0 To provide for 20x4 impairment loss and depreciation and amortization on differences between acquisition date fair value and book value of Son’s identifiable assets and liabilities as follows: Cost of Good s Sold Deprecia tion/ Amortiz ation expense Amortiz ation -Interest Tota l Invent ory sold P 6,000 Equip P 12,000
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ment Buildi ngs ( 6,000) Bonds payabl e ____ ___ _______ P 1,200 Totals P 6,000 P 6,000 P1,200 13,2 00 It should be observed that the goodwill computed above was proportional to the controlling interest of 80% and non-controlling interest of 20% computed as follows: Value % of Total Goodwill applicable to parent………………… P12,00 0 80.00% Goodwill applicable to NCI……………………..
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