The consolidation worksheet will only eliminate all

The consolidation worksheet will only eliminate all of the Investment in Subsidiary account when the
parent owns 100 percent of the subsidiary’s stock.
True
False
When the parent acquired 100 percent of the subsidiary’s stock for book value during the current period,
consolidated net income is always the sum of the parent’s net income and the subsidiary’s net income
for the entire reporting period.
PP Corporation acquired 70% of SS on January 1, 2019. At that date, SS had equipment (10-year
remaining life) with a market value and book value of P80,000 and P60,000 respectively. SS's income in
2019 and 2020 were P15,000 and P22,000, respectively while dividends paid were P6,000 and P9,000,
respectively. Parent accounts for the investment under the cost method. What amount of adjustment to
the investment account is necessary to convert the cost method investment account (and retained
earnings account) to the equity method balance at December 31, 2020 (or January 1, 2021)?
PP Incorporated acquires all of the outstanding stock of SS Company on January 1, 2019. On that date, SS
owns only three assets and has no liabilities. Inventory: Book value - P40,000; Fair value - P50,000.
Equipment (10 year life): Book value - P80,000; Fair value - P75,000. Building (20-year life): Book value -
P200,000; Fair value - P300,000. If PP pays P450,000 in cash for SS, what amount would be represented
as the subsidiary's Equipment in consolidation at December 31, 2021, assuming the book value at that
date is still P80,000?

P75,000
P70,000
PP Incorporated acquires all of the outstanding stock of SS Company on January 1, 2019. On that date, SS
owns only three assets and has no liabilities. Inventory: Book value - P40,000; Fair value - P50,000.
Equipment (10 year life): Book value - P80,000; Fair value - P75,000. Building (20-year life): Book value -
P200,000; Fair value - P300,000. If PP pays P450,000 in cash for SS, what allocation should be assigned to
the subsidiary's Equipment in preparing for consolidation at December 31, 2021, assuming the book
value at that date is still P80,000?
P3,500
P73,500
P75,000
P5,000