Problem XV 1 Eliminating entry x9 E1 Buildings and Equipment

Problem xv 1 eliminating entry x9 e1 buildings and

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Problem XV 1. Eliminating entry, December 31, 20x9: E(1) Buildings and Equipment 156,000 Loss on Sale of Building 36,000 Accumulated Depreciation 120,000 Eliminate unrealized loss on building. 2. Consolidated net income and income to controlling interest for 20x9: Operating income reported by BB P125,000 Net income reported by TT P 15,000 Add: Loss on sale of building 36,000 Realized net income of TT 51,000 Consolidated net income P176,000 Income to non-controlling interest (P51,000 x .30) (15,300 ) Income to controlling interest P160,700 3. Eliminating entry, December 31, 20y0: E(1) Buildings and Equipment 156,000 Depreciation Expense 4,000 Accumulated Depreciation 124,000 Retained Earnings, January 1 25,200 Non-controlling Interest 10,800 Eliminate unrealized loss on building.
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Adjustment to buildings and equipment Amount paid by TT to acquire building P300,000 Amount paid by BB on intercompany sale (144,000 ) Adjustment to buildings and equipment P156,000 Adjustment to depreciation expense Depreciation expense recorded by TT Company (P300,000 / 15 years) P 20,000 Depreciation expense recorded by BB Corporation (P144,000 / 9 years) (16,000 ) Adjustment to depreciation expense P 4,000 Adjustment to accumulated depreciation Amount required (P20,000 x 7 years) P140,000 Amount reported by BB (P16,000 x 1 year) (16,000 ) Required adjustment P124,000 Adjustment to retained earnings, January 1, 20y0 Unrealized loss recorded, December 31, 20x9 P36,000 Proportion of ownership held by BB x .70 Required adjustment P25,200 Adjustment to Noncontrolling interest, January 1, 20y0 Unrealized loss recorded, December 31, 20x9 P36,000 Proportion of ownership held by non-controlling Interest x .30 Required adjustment P10,800 4. Consolidated net income and income assigned to controlling interest in 20y0: Operating income reported by BB P150,000 Net income reported by TT P40,000 Adjustment for loss on sale of building (4,000 ) Realized net income of TT 36,000 Consolidated net income P186,000 Income assigned to non-controlling interest (P36,000 x .30) (10,800) Income assigned to controlling interest P175,200 Problem XVI 1. 20x4 20x5 20x6 Consolidated net income as reported P 750,000 P 600,000 P 910,000 Less: P10,000 deferred gain -10,000 Plus: NCI portion of the gain 3,000 Plus: Deferred gain 7,000 Corrected consolidated net income P 743,000 P 600,000 P 917,000 2. 20x4 20x5 20x6 Land account as reported P 200,000 P 240,000 P 300,000 Less: Intercompany profit -10,000 -10,000
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Restated land account P 190,000 P 230,000 P 300,000 3. Final sales price outside the entity minus the original cost to the combined entity equals P102,000 minus P72,000 = P30,000 Problem XVII 1. The gain on the sale of the land in 20x5 was equal to the sales price minus the original cost of the land when it was first acquired by the combined entity. In this case the gain was P150,000 - P90,000, or P60,000. 2. The consolidated amount of depreciation expense was the combined amounts of depreciation expense showing on the separate income statements minus the piecemeal recognition of the gain on the sale of the equipment. Thus, the consolidated amount of depreciation expense was P95,000 + P32,000 – (P35,000/4 years) = P118,250.
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