Schedule 1 Non controlling Interest in Bennetts Income includes upstream

Schedule 1 non controlling interest in bennetts

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Schedule 1: Non-controlling Interest in Bennett's Income (includes upstream transfer) Reported net income of subsidiary ......................................................... P90,000 Excess amortization ................................................................................. (8,000) Eliminate unrealized gain on equipment transfer ................................... (50,000) Eliminate excess depreciation (P50,000 ÷ 5) .......................................... 10 ,000 Bennett's realized net income ................................................................. P42,000 Outside ownership .................................................................................. 10% Non-controlling interest in subsidiary's income ..................................... P 4 ,200 4. Net income 20x5—ST ............................................................................ P240,000 Net income 20x5—BB ............................................................................ 100,000 Excess amortization ................................................................................. (8,000) Eliminate excess depreciation stemming from transfer (P50,000 ÷ 5) (year after transfer) .................................................... 10 ,000 Consolidated net income ............................................................... P342 ,000 Problem XII 1. On the consolidated balance sheet, the machine must be reported at its original cost when Tool purchased it on January 1, 20x1, which is P120,000. Since the elimination entry debited the machine account for P22,000 which must be the amount needed to bring the machine account up to P120,000, Buzzard must have recorded the machine at P98,000. Since the remaining useful life is seven years, Buzzard will record P14,000 of depreciation expense each year. 2. The correct balances on the consolidated balance sheet for the Machine and Accumulated Depreciation accounts are the balances that would be in the accounts if there had been no sale. The balance in the machine account would be the original purchase price to Tool or P120,000. The balance in the Accumulated Depreciation account will be the original amount of annual depreciation, (P12,000) times the number of years the machine has been depreciated (4), or P48,000. 3. The non-controlling interest income will be 30% of Tool’ adjusted net income. Tool’ reported net income of P60,000 is reduced by the P14,000 unrealized gain on the sale of the machine and is increased by the piecemeal recognition of the gain, which is P2,000. The net result of P48,000 is then multiplied by 30% to calculate a P14,400 income for the non- controlling interest. Problem XIII 1. Downstream sale of land : 20x4 20x5 VV’s separate operating income P 90,000 P110,000 Less: Unrealized gain on sale of land (25,000 ) VV’s realized operating income P 65,000 P110,000 Spawn’s realized net income 60,000 40,000 Consolidated net income P125,000 P150,000 Income to non-controlling interest:
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(P60,000 x .25) (15,000) (P40,000 X .25) (10,000 ) Income to controlling interest P110,000 P140,000 2. Upstream sale of land : 20x4 20x5 VV’s separate operating income P 90,000 P110,000 SS’s net income P60,000 Less: Unrealized gain on sale of land (25,000 ) Spawn’s realized net income 35,000 40,000 Consolidated net income P125,000 P150,000 Income to non-controlling interest: (P35,000 x .25) (8,750) (P40,000 x .25) (10,000 ) Income to controlling interest P116,250 P140,000 Problem XIV 1. Consolidated net income for 20x4 will be greater than PP Company's income from operations plus SS's reported net income. The eliminating entries at December 31, 20x4, will result in an increase of P16,000 to consolidated net income. 2. As a result of purchasing the equipment at less than Parent's book value, depreciation expense reported by SS will be P2,000 (P16,000 / 8 years) below the amount that would have been recorded by PP. Thus, depreciation expense must be increased by P2,000 when eliminating entries are prepared at December 31, 20x5. Consolidated net income will be decreased by the full amount of the P2,000 increase in depreciation expense.
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