Decrease in buildings P24000 x 80 19200 Decrease in bonds payable P4800 x 80

Decrease in buildings p24000 x 80 19200 decrease in

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Decrease in buildings (P24,000 x 80%) ……… ..... ( 19,200) Decrease in bonds payable (P4,800 x 80%)…… 3,840 72,000 Positive excess: Partial-goodwill (excess of cost over fair value) ………………………………………………... P 12,000 The over/under valuation of assets and liabilities are summarized as follows: S Co. Book value S Co. Fair value (Over) Under Valuation Inventory…………………. …………….. P 24,000 P 30,000 P 6,000 Land……………………………… ……… 48,000 55,200 7,200 Equipment (net) ......... 84,000 180,000 96,000 Buildings (net) 168,000 144,000 (24,000) Bonds payable………………………… (120,000) ( 115,200) 4,800 Net……………………………… ……….. P 204,000 P 294,000 P 90,000 The buildings and equipment will be further analyzed for consolidation purposes as follows: S Co. Book value S Co. Fair value Increase (Decrease) Equipment .................. 180,000 180,000 0 Less: Accumulated depreciation….. 96,000 - ( 96,000) Net book value………………………... 84,000 180,000 96,000 S Co. Book value S Co. Fair value (Decrease) Buildings ................ 360,000 144,000 ( 216,000) Less: Accumulated depreciation….. 1992,000 - ( 192,000) Net book value………………………... 168,000 144,000 ( 24,000)
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A summary or depreciation and amortization adjustments is as follows: Account Adjustments to be amortized Over/ Under Lif e Annual Amount Current Year(20x4) 20x5 Inventory P 6,000 1 P 6,000 P 6,000 P - Subject to Annual Amortization Equipment (net) ......... 96,000 8 12,000 12,000 12,000 Buildings (net) (24,000 ) 4 ( 6,000) ( 6,000) (6,000) Bonds payable… 4,800 4 1,200 1,200 1,200 P 13,200 P 13,200 P 7,200 The goodwill impairment loss of P3,750 based on 100% fair value would be allocated to the controlling interest and the NCI based on the percentage of total goodwill each equity interest received. For purposes of allocating the goodwill impairment loss, the full-goodwill is computed as follows: Fair value of Subsidiary (100%) Consideration transferred: Cash (80%) P 372,000 Fair value of NCI (given) (20%) 93,000 Fair value of Subsidiary (100%) P 465,000 Less: Book value of stockholders’ equity of S (P360,000 x 100%) __360,000 Allocated excess (excess of cost over book value)….. P 105,000 Add (deduct): (Over) under valuation of assets and liabilities (P90,000 x 100%) 90,000 Positive excess: Full-goodwill (excess of cost over fair value)………………………………………………... P 15,000 In this case, the goodwill was proportional to the controlling interest of 80% and non-controlling interest of 20% computed as follows: Value % of Total Goodwill applicable to parent………………… P12,000 80.00% Goodwill applicable to NCI…………………….. 3,000 20.00% Total (full) goodwill……………………………….. P15,000 100.00% The goodwill impairment loss would be allocated as follows Value % of Total Goodwill impairment loss attributable to parent or controlling Interest P 3,000 80.00% Goodwill applicable to NCI…………………….. 750 20.00% Goodwill impairment loss based on 100% fair value or full- Goodwill P 3,750 100.00% The unrealized and gain on intercompany sales for 20x4 are as follows: Date of Sale Seller Selling Price Book Value Unrealized* Gain on sale Remainin g Life Realized gain – depreciation** 20x4 4/1/20x 4 P P90,00 0 P75,00 0 P15,000 5 years P3,000/year P2,25 0 1/2/20x 4 S 60,00 0 28,80 0 31,200 8 years P3,900/year P3,90 0 * selling price less book value
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** unrealized gain divided by remaining life; 20x4 – P2,500 x 9/12 = P1,875 The following summary for 20x4 results of operations is as follows: P Co.
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