P 7000 35 c p22500 x 415 p6000 36 a p50000 p50000 x

P 7,000
35. c – (P22,500 x 4/15 = P6,000)
36. a – [P50,000 – (P50,000 x 4/10) = P30,000]

37
.
b The P39,000 paid to GG Company will be charged to depreciation expense by TLK
Corporation over the remaining 3 years of ownership. As a result, TLK Corporation
will debit depreciation expense for P13,000 each year. GG Company had charged
P16,000 to accumulated depreciation in 2 years, for an annual rate of P8,000.
Depreciation expense therefore must be reduced by P5,000 (P13,000 - P8,000) in
preparing the consolidated statements.
38
.
a TLK Corporation will record the purchase at P39,000, the amount it paid. GG
Company had the equipment recorded at P40,000; thus, a debit of P1,000 will raise
the equipment balance back to its original cost from the viewpoint of the consolidated
entity.
39
.
b Reported net income of GG Company P 45,000
Reported gain on sale of equipment P15,000
Intercompany profit realized in 20x6 (5,000 ) (10,000 )
Realized net income of GG Company P 35,000
Proportion of stock held by
non-controlling interest x .40
Income assigned to non-controlling interests P 14,000
40
.
c Operating income reported by TLK Corporation P 85,000
Net income reported by GG Company 45,000
P130,000
Less: Unrealized gain on sale of equipment
(P15,000 - P5,000) (10,000 )
Consolidated net income P120,000
41. b
Eliminating entries:
12/31/20x5: date of acquisition
Restoration of BV and eliminate unrealized gain
Equipment 10,000
Gain 150,00
0
Accumulated depreciation 160,00
0
Parent Books – Mortar Subsidiary Books – Granite
Cash 390,000 Equipment 390,000
Accumulated depreciation 160,000 Cash 390,000
Equipment 400,000
Gain 150,000
Mortar
Selling price P390,000
Less: Book value, 12/31/20x5
Cost, 1/1/20x2 P400,000
Less: Accumulated depreciation : P400,000/10 years x 4
years
160,000 240,00
0
Unrealized gain on sale of equipment P
150,000
Realized gain – depreciation: P150,000/6 years P

25,000
42. a – refer to No. 41 for computation
43. b - refer to No. 41 for computation
44. d
Eliminating entries:
12/31/20x6: subsequent to date of acquisition
Realized Gain – depreciation
Accumulated depreciation 25,000
Depreciation expense 25,000
P150,000 / 6 years or P65,000 – P40,000
“Should be in CFS” Parent Books – Mortar “Recorded as” Subsidiary Books -
Granite
Depreciation expense
(P400,000 / 10 years) 40,000
Depreciation expense
(P390,000 / 6 years) 65,000
Acc. Depreciation 40,000 Acc. depreciation 65,000
45. c
Eliminating entries:
12/31/20x6: subsequent to date of acquisition
Equipment 10,000
Retained earnings (150,000 – 25,000) 100,00
0
Accumulated depreciation (P160,000 – P25,000) 135,00
0
46. a
Total gain on the sale = P1,000,000 – (P500,000 - P150,000) = P650,000
Unconfirmed gain after three years = 2/5 x P650,000 = P260,000
47. d
Depreciation to 1/1/x3 is P25,000
Depreciation expense for 20x3 and 20x4 is (P85,000 - P25,000)/6 = P10,000 per year
Therefore accumulated depreciation at 12/31/x4 is P45,000.
Net equipment balance is P85,000 - P45,000 = P40,000.
48. b
At the end of two years, the subsidiary reports the equipment at original cost of
P2,500,000 and accumulated depreciation of (P2,500,000/10) x 2 = P500,000.
Depreciation expense is P250,000.
The consolidated balance sheet reports the equipment at original cost of P1,000,000 and
accumulated depreciation of P200,000 + ([(P1,000,000 - P200,000)/10] x 2) = P360,000.