P 55200 Multiplied by Controlling interest 80 Retroactive adjustment P 44160

P 55200 multiplied by controlling interest 80

This preview shows page 18 - 21 out of 102 pages.

Increase in retained earnings…….. P 55,200 Multiplied by: Controlling interest % 80% Retroactive adjustment P 44,160 Entry (1) above is needed only for firms using the cost method to account for their investments in the subsidiary. If the parent is already using the equity method, there is no need to convert to equity. (E2) Common stock S Co………………………………………… 240,000 Retained earnings – S Co., 1/1/20x5 175,200 Investment in S Co (P415,200 x 80%) ………………………… 332,160
Image of page 18

Subscribe to view the full document.

Non-controlling interest (P415,200 x 20%) ……………………….. 83,040 To eliminate intercompany investment and equity accounts of subsidiary and to establish non-controlling interest (in net assets of subsidiary) on January 1, 20x5. (E3) Inventory…………………………………………………………………. 6,000 Accumulated depreciation – equipment……………….. 96,000 Accumulated depreciation – buildings………………….. 192,000 Land………………………………………………………………… ……. 7,200 Discount on bonds payable…………………………………………. 4,800 Goodwill…………………………………………………………… ……. 12,000 Buildings……………………………………….. 216,000 Non-controlling interest (P90,000 x 20%) 18,000 Investment in S Co………………………………………………. 84,000 To allocate excess of cost over book value of identifiable assets acquired, with remainder to goodwill; and to establish non- controlling interest (in net assets of subsidiary) on January 1, 20x5. (E4) Retained earnings – P Company, 1/1/20x5 [(P13,200 x 80%) + P3,000, impairment loss on partial-goodwill] 13,560 Non-controlling interests (P13,200 x 20%) ……………………. 2,640 Depreciation expense……………………….. 6,000 Accumulated depreciation – buildings………………….. 12,000 Interest expense………………………………… 1,200 Inventory………………………………………………… ……….. 6,000 Accumulated depreciation – equipment……………….. 24,000 Discount on bonds payable………………………… 2,400 Goodwill…………………………………… 3,000 To provide for years 20x4 and 20x5 depreciation and amortization on differences between acquisition date fair value and book value of Son’s identifiable assets and liabilities as follows: Year 20x4 amounts are debited to Perfect’s retained earnings & NCI; Year 20x5 amounts are debited to respective nominal accounts. (20x4) Retained earnings , Depreciation / Amortization expense Amortizatio n -Interest Inventory sold P 6,000 Equipment 12,000 P 12,000 Buildings (6,000) ( 6,000) Bonds payable 1,200 ________ P 1,200 Sub-total P13,200 P 6,000 P 1,200
Image of page 19
Multiplied by: 80% To Retained earnings P 10,560 Impairment loss 3,000 Total P 13,560 (E5) Dividend income - P………. 38,400 Non-controlling interest (P48,000 x 20%)……………….. 9,600 Dividends paid – S…………………… 48,000 To eliminate intercompany dividends and non-controlling interest share of dividends.
Image of page 20

Subscribe to view the full document.

Image of page 21
  • Spring '16

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes