6000 Accumulated depreciation buildings 6000 Interest expense 1200 Goodwill

6000 accumulated depreciation buildings 6000 interest

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6,000 Accumulated depreciation – buildings………………….. 6,000 Interest expense………………………………… 1,200 Goodwill impairment loss………………………………………. 3,000 Inventory……………………………… ………………………….. 6,000 Accumulated depreciation – equipment……………….. 12,000 Discount on bonds payable………………………… 1,200 Goodwill……………………………… …… 3,000 Cost Deprecia
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of Goo ds Sold tion/ Amortiz ation Expense Amorti zation - Interest Tot al Inventory sold P 6,00 0 Equipme nt P 12,000 Buildings ( 6,000) Bonds payable ____ ___ _______ P 1,200 Totals P 6,00 0 P 6,000 P1,200 13, 200 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………………… P12,0 00 80.00% Goodwill applicable to NCI…………………….. 3,00 0 20.00% Total (full) goodwill……………………………….. P15,00 0 100.00 % Therefore, the goodwill impairment loss of P3,750 based on 100% fair value or full-goodwill would be allocated as follows: Value % of Total Goodwill impairment loss attributable to parent or controlling Interest P 3,000 80.00% Goodwill impairment loss applicable to NCI…………………….. 62 5 20.00%
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Goodwill impairment loss based on 100% fair value or full- Goodwill P 3,750 100.00 % (E4) Investment income 34,440 Non-controlling interest (P36,000 x 20%) ……………….. 7,200 Dividends paid – S…………………… 36,000 Investment in S Company 5,640 To eliminate intercompany dividends and investment income under equity method and establish share of dividends, computed as follows: After the eliminating entries are posted in the investment account, it should be observed that from consolidation point of view the investment account is totally eliminated. Thus, Investment in S Investment Income NI of S 28,800 Dividends - S NI of S (60,000 x 80%) ……. 48,000 Amor tization & 13,560 impairment Amortization impairment 13,560 (60,000 48,000 x 80%) 5,640 34,440
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(E5) Non-controlling interest in Net Income of Subsidiary………… 9,360 Non-controlling interest ………….. 9,360 To establish non-controlling interest in subsidiary’s adjusted net income for 20x4 as follows: Net income of subsidiary…………………… .. P 60,000 Amortization of allocated excess [(E3)]…... ( 13,20 0) P 46,800 Multiplied by: Non- controlling interest % .......... 2 0% Non-controlling Interest in Net Income (NCINI) P 9,360 Worksheet for Consolidated Financial Statements, December 31, 20x4. Equity Method (Partial-goodwill) 80%-Owned Subsidiary December 31, 20x4 (First Year after Acquisition) Income Statement P Co S Co. Dr. Cr. Consoli dated Sales P480,0 00 P240, 000 P 720,000 Investment income 34,4 40 - (4) 34,440 ______ ___ Investment in S Cost, 1/1/x4 372,000 28,800 Dividends – S (36,000x 80%) NI of Son Amortization & (60,000 x 80%) 48,000 13,560 impairment Balance, 12/31/x4 377,640 288,000 (E1) Investment, 1/1/20x4 84,000 (E2) Investment, 1/1/20x4 5,640 (E4) Investment Income and dividends 377,640 377,640
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Total Revenue P513,6 00 P240, 000 P 720,000 Cost of goods sold P204,0 00 P138, 000 (3) 6,000 P 348,000 Depreciation expense 60,000 24,00 0 (3) 6,000 90,000 Interest expense - - (3) 1,200 1,200 Other expenses 48,000 18,00 0 66,000 Goodwill impairment loss - - (3) 3,000 3,0 00 Total Cost and Expenses P312,0 00 P180, 000 P508,20 0 Net Income P202,4 40 P 60,00 0 P211,80 0
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