80000 Less Dividends 100 x P10000 10000 Amortization of cost in excess of book

80000 less dividends 100 x p10000 10000 amortization

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Add: Pedro’s equity in net income of Sanburn – x4 (100% x P80,000).. …80,000 Less: Dividends (100% x P10,000) ……………………………………………. 10,000 Amortization of cost in excess of book value: Inventory: P20,000 x 100% ……………………………………………… 20,000 Patent [P500,000 – P380,000 = P120,000 – P20,000 = P100,000) (P100,000/20 years) x 100% .......................................................... ___5,000 Investment in Wisden 1/1/x6. 230,400 9,000 Dividends – S (10,0 00 x 90%) NI of S (30,000 x 90%) ……. 27,000 Amor tization 6,300 (7,000 x 90%) 1/1/x6215,10 0
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Investment balance, equity method, 12/31/20x4…………………………. P545,000 53. d Under the cost method , an investor recognizes its investment in the investee at cost. Income is recognized only to the extent that the investor receives distributions from the accumulated net profits (or dividend declared/paid by the investee) of the investee arising after the date of acquisition by the investor. Distributions (dividends) received in excess of such profits are regarded as a recovery of investment and are accounted for as a reduction of the cost of the investment (i.e., as a return of capital or liquidating dividend). Therefore, the investment balance of P500,000 on the acquisition date remains to be the same. 54. d – refer to No. 53 for further discussion. 55. b – refer to No. 53 for further discussion. 56. a – P40,000 x 80% 57. b – P50,000 x 80% 58. a – P60,000 x 80% 59. c Full/Gross-up Goodwill Presentation: Non-controlling interest in Net Income: Subsidiary net income from own operations……….P100,000 Less: Amortization of allocated excess*…………… 7,000 Impairment of full-goodwill (if any)**………… 0 P 93,000 x: Non-controlling interests……………………………. 20 % Non-controlling interest in Net Income………………………..P 18,600 *Amortization of allocated excess: Increase in equipment: P30,000 / 10 years = P 3,000 Increase in buildings: P40,000 / 10 years = 4,000 Total amortization……………………………… P 7,000
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** In case, there is an impairment of goodwill then the amount impaired under the full-goodwill method should also be allocated between controlling and non-controlling interests Partial Goodwill Presentation: Non-controlling interest in Net Income: Subsidiary net income from own operations……….P100,000 Less: Amortization of allocated excess*………………7,000 P 93,000 x: Non-controlling interests……………………………. 20 % Non-controlling interest in Net Income…………………. P 18,600 60. c Full/Gross-up Goodwill Presentation: Non-controlling interest in Net Income: Subsidiary net income from own operations……….P120,000 Less: Amortization of allocated excess*…………….. 7,000 Impairment of full-goodwill (if any)**………… 0 P113,000 x: Non-controlling interests……………………………. 20 % Non-controlling interest in Net Income………………………..P 22,600 *Amortization of allocated excess: Increase in equipment: P30,000 / 10 years = P 3,000 Increase in buildings: P40,000 / 10 years = 4,000 Total amortization………………………. P 7,000 ** In case, there is an impairment of goodwill then the amount impaired under the full-goodwill method should also be allocated between controlling and non-controlling interests Partial Goodwill Presentation: Non-controlling interest in Net Income: Subsidiary net income from own operations……….P120,000 Less: Amortization of allocated excess*…………….. 7,000
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