At the acquisition date the net assets of entity b

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At the acquisition date, the net assets of Entity B were reported at P400,000. An asset of Entity B was overvalued by P50,000 while one liability wass overvalued by P30,000. 64. What is the gain on remeasurement of the existing Investment in Entity B as a result of step acquisition? A. 18,000 B. 30,000 C. 24,000 D. 12,000 65. What is the goodwill or gain on bargain purchase as a result of the business combination? A. 18,000 goodwill B. 20,000 gain on bargain purchase C. 24,000 goodwill D. 30,000 goodwill
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Page 23 Numbers 66, 67 and 68 (Consolidated Financial Statements) On January 1, 2018, Entity A acquired 70% of outstanding ordinary shares of Entity B at a price of P210,000. On the same date, the net assets of Entity B were reported at P260,000. On January 1, 2018 Entity A reported retained earnings of P2,000,000 while Entity B reported retained earnings of P200,000. All the assets and liabilities of Entity B are fairly valued except machinery which is undervalued by P80,000 and inventory which is overvalued by P10,000. The said machinery has remaining useful life of four years while 40% of the said inventory remained unsold at the end of 2018. For the year ended December 31, 2018, Entity A reported net income of P1,000,000 and declared dividends of P200,000 in the separate financial statements while Entity B reported net income of P150,000 and declared dividends of P20,000 in the separate financial statements. Entity A accounted the investment in Entity B using cost method in the separate financial statements. 66. What is the noncontrolling interest in net assets on December 31, 2018? A. 124,800 B. 130,200 C. 126,000 D. 133,800 67. What is the consolidated net income attributable to parent shareholders for the year ended December 31, 2018? A. 1,102,200 B. 1,162,200 C. 1,141,200 D. 1,095,200 68. What is the amount of consolidated retained earnings on December 31, 2018? A. 3,012,200 B. 2,991,200 C. 2,952,200 D. 2,945,200
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Page 24 Numbers 69, 70, 71 and 72 (Consolidated Financial Statements - Intercompany sales) On January 1, 2019, Entity A acquired 60% of outstanding ordinary shares of Entity B at a gain on bargain purchase of P40,000. For the year ended December 31, 2020, Entity A and Entity B reported sales revenue of P2,000,000 and P1,000,000 in their respective separate income statements. At the same year, Entity A and Entity B reported cost of goods sold of P1,200,000 and P700,000 in their respective separate income statements. During 2019, Entity A sold inventory to Entity B at a selling price of P280,000 with gross profit rate of 40% based on cost. On the other hand, Entity B sold inventory to Entity A at a selling price of P400,000 with gross profit rate of 30% based on sales during 2020. On December 31, 2019, 25% of the goods coming from Entity A remained in Entity B’s inventory but all were eventually sold to third persons during 2020. As of December 31, 2020, 40% of the goods coming from Entity B were eventually sold to third persons. For the year ended December 31, 2020, Entity A reported net income of P500,000 while Entity B reported net income of P200,000 and distributed dividends of P50,000. Entity A accounted for its inventory in Entity B using cost method in its separate financial statements.
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