Consolidated Fs Quiz

DMC College Foundation Practical Accounting 2 Consolidated F/S 1. Papa Corporation owns 75% of the outstanding stock of San Company, acquired at book value during 2015. Selected information from the accounts of Papa and San for 2017 are as follows: Papa San Sales ₱900,000 ₱500,000 Cost of goods sold 490,000 190,000 During 2017, Papa sold merchandise to San for ₱50,000 at a gross profit of ₱20,000. Half of this merchandise remained in San’s inventory at December 31, 2017. San’s December 31, 2016 inventory included unrealized profit of ₱4,000 on goods acquired from Papa. In the consolidated income statement for Papa Corporation and subsidiary for the year 2017, consolidated sales and cost of goods sold should be: a. ₱1,450,000 and ₱636,000 c. ₱1,350,000 and ₱634,000 b. 1,350,000 and 636,000 d. 1,400,000 and 624,000 2. Pidro Corporation owns an 80% interest in Sisa Company, and at December 31, 2016, Pidro’s investment in Sisa under the cost method was equal to 80% of Sisa’s stockholder’s equity. During 2017, Sisa sells merchandise to Pidro for ₱100,000, at a gross profit to Sisa of ₱20,000. At December 31, 2017, half of this merchandise is included in Pidro’s inventory. Separate incomes for Pidro and Sisa for 2017 are summarized as follows: Pidro Sisa Sales ₱500,000 ₱300,000 Cost of sales (250,000) (200,000) Operating expenses (125,000) (40,000) Net income from own operations ₱125,000 ₱60,000 In the consolidated income statement for 2017, NCI in net income of subsidiary is: a. ₱12,000 b. ₱11,000 c. ₱10,000 d. ₱14,000 3. Pat Corporation owns 70% of Susan Company’s outstanding stock, acquired on January 1, 2016. Susan regularly sells merchandise to Pat at 150% of Susan’s cost. Pat’s December 31, 2016 and 2017 inventories include goods purchased intercompany of ₱112,500 and ₱33,000, respectively. The separate incomes (excluding investment income) of Pat and Susan for 2017 are summarized below: Pat Susan Sales ₱1,200,000 ₱800,000 Cost of goods sold (600,000) (500,000) Operating expenses (400,000) (100,000) Net income from own operations 200,000 200,000 Consolidated net income should be allocated to parent and NCI in the amount of: a. ₱338,550 and ₱67,950, respectively b. 346,500 and 67,950, respectively c. 346,500 and 60,000, respectively d. 358,550 and 67,950, respectively 4. Patton Corporation acquired a 60% interest in Solis Company on January 1,2016 for ₱360,000, when Solis’ net assets had a book value and fair value of ₱600,000. During 2016, Patton sold inventory items that cost ₱600,000 to Solis for ₱800,000, and Solis’ inventory at December 31, 2016 included one-fourth of this merchandise. Patton reported separate income from its own operations (excluding investment income) of ₱300,000, and

Solis reported a net loss of ₱150,000 for 2016. Consolidated net income for Patton Corporation and Subsidiary for 2016 is: a. ₱180,000 b. ₱100,000 c. ₱160,000 d. ₱260,000 5. Santos Company, a 75%-owned subsidiary of Pardo Corporation, sells inventory items to its parent at 125% of cost. Inventories of the two affiliated companies for 2017 are as follows: Pardo Santos Beginning inventory ₱400,000 ₱250,000 Ending inventory 500,000 200,000 Pardo’s beginning and ending inventories include merchandise acquired from Santos of ₱150,000 and ₱200,000, respectively. If Santos reports net income of ₱300,000 for 2017, Pardo’s investment income under the equity method will be: a. ₱195,000 b. ₱255,000 c. ₱215,000 d. ₱217,500 6. On January 1, 2016, Puzon Company purchased 75% of the outstanding stock of Suazon Company at book value. During 2016, Suazon sold inventory items costing ₱50,000 to Puzon for ₱75,000. Puzon resold 60% of this inventory to outsiders during the year for ₱100,000. For the year 2016, Puzon had net income from its own operations of ₱200,000 and paid dividends of ₱120,000. Suazon’s net income for the year was ₱110,000; it paid ₱40,000 in dividends. What is the consolidated net income attributable to parent for 2016? a. ₱273,000 b. ₱276,000 c. ₱300,000 d. ₱275,000 7. On January 1, 2016, Pat Corporation acquired 80% of Sun Company at book value. The following information is available for years 2016 and 2017: 2016 2017 Net income from its own operations Pat ₱500,000 ₱550,000 Sun 200,000 225,000 Intercompany sales by Pat to Sun 100,000 120,000 Intercompany cost of sales 60,000 60,000 Invty. @ billed prices, Dec. 31 20,000 30,000 The consolidated net income in 2016 and 2017 are: a. ₱652,000 and ₱723,000, respectively b. 692,000 and 768,000, respectively c. 652,000 and 715,000, respectively d. 653,600 and 724,400, respectively 8. Several years ago, Pip Company acquired 70% of Sol Company at book value. Relevant data for 2016 are as follows: Pip Sol Net income from its own operations ₱400,000 ₱250,000 Dividends declared and paid in 2016 270,000 110,000 Merchandise from intercompany sales in Pips inventory: January 1, 2016 40,000 December 31, 2016 70,000 Gross profit rate on sales: 2015 70% 40% 2016 75% 30% Consolidation net income for 2016 is:

a. ₱645,000

b. ₱625,000

c. ₱517,000

d. ₱571,500

9. Popo Corporation purchased 95% of the stock of Sotto Company on January 2016. On that date, the book value of Sotto’s net assets approximated fair value. As a result of the purchase, Popo recognized ₱60,000 of goodwill. During 2016, Sotto sold inventory to Popo. On December 31, 2016, Sotto had unrealized profits on its books of ₱10,000. By December 31, 2017, all of the inventory left on Popo’s books had been sold to outside parties. During 2017, Popo sold inventory to Sotto and had ₱15,000 of unrealized profits left on its books at the end of 2017. For 2017, Popo reported operating income of ₱500,000, and Sotto reported net income of ₱360,000. What is the consolidated income attributable to parent for 2017? a. ₱836,500 b. ₱833,000 c. 833,500 d. ₱855,000 10. On January 1, 2016, Post Corporation acquired 60% of the outstanding common stock of Sand Company at an excess of cost over book value of ₱1,000,000. This excess was allocated to plant assets with a remaining useful life of five years. For the year ended December 31, 2016, Sand Company prepared the following condensed financial statements: Condensed Statement of Financial Position @ Dec. 31, 2016 Current assets ₱900,000 Plant assets – net 5,000,000 Total assets 5,900,000 Liabilities Capital stock Retained earnings Total liabilities and stockholder’s equity

400,000 3,400,000 2,100,000 5,900,000

Condensed Statements of Comprehensive Income and R/E Sales Cost of goods sold Operating expenses Net income Retained earnings, Jan. 1 Dividends Retained earnings, Dec. 31

1,000,000 (500,000) (300,000) 200,000 2,000,000 (100,000) 2,100,000

Sand regularly sells merchandise to Post at a gross profit of 25% above cost. In 2015 and 2016 sales from Sand to Post are: 2015 2016 Sales ₱840,000 ₱960,000 Inventory unsold by Post @ Dec. 31 120,000 360,000 On December 31,2016 consolidated statements, NCI in net income(loss) of subsidiary should be reported at: a. (₱60,800) b. ₱50,000 c. ₱56,000 d. (₱19,200) 11-12. Parco Corporation acquired an 80% interest in Slack Company on January 2, 2016 for ₱10,080,000. On this date, the share capital and retained earnings of the two companies follow: Parco Corp. Slack Co. Share Capital ₱24,000,000 ₱9,000,000 Retained Earnings 12,000,000 1,800,000

On January 2, 2016, the assets and liabilities of Slack Co. were stated at their fair values except for machinery which is undervalued by ₱900,000 (remaining life is 3 year). On September 30, 2016, Slack sold merchandise to Parco at an inter-company profit of ₱600,000; 1/4 was still unsold at year-end. Likewise, on October 1, 2017, Slack purchased merchandise from Parco for ₱14,400,000. The selling affiliate included a 20% mark-up on cost on this sale. Only 3/4 of these purchases had been sold to unrelated parties as of December 31, 2017. As of December 31, 2017, goodwill was determined to be impaired by ₱240,000. The following is the summary of the 2017 transactions of the affiliated companies: Parco Corp. Slack Co. Net income ₱6,000,000 ₱2,400,000 Dividends declared and paid 2,400,000 720,000 11. What is the net income attributable to parent shareholder’s equity in the 2017 consolidated financial statements? a. ₱6,432,000 b. ₱6,744,000 c. ₱6,552,000 d. ₱6,834,000 12. What is the non-controlling interest in net income in the 2017 consolidated financial statements? a. ₱330,000 b. ₱342,000 c. ₱282,000 d. ₱402,000 13-14. On January 1, 2016, Rapids Company purchased 80% of the outstanding shares of Mock Corporation at book value. The stockholder’s equity of Mock Corporation on this date showed: Ordinary shares - ₱4,560,000 and Retained earnings - ₱3,920,000. On April 30, 2016, Rapids Company acquired used machinery for ₱672,000 from Mock Corp. that was being carried in the latter’s books at ₱840,000. The asset still has a remaining useful life of 5 years. On the other hand, on August 31, 2016, Mock Corp. purchased an equipment that was already 20% depreciated from Rapids Co. for ₱2,760,000. The original cost of this equipment was ₱3,000,000 and had a remaining life of 8 years. Net income of Rapids Co. and Mock Corp. for 2016 amounted to ₱2,880,000 and ₱1,240,000. Dividends paid totaled to ₱920,000 and ₱420,000 for Rapids Co. and Mock Corp., respectively. 13. What is the net income in the consolidated financial statements in 2016? a. ₱3,920,600 b. ₱3,775,000 c. ₱3,584,600 d. ₱3,307,480 14. What is the net income attributable to parent’s shareholder’s equity in the consolidated financial statements I 2016? a. ₱3,336,600 b. ₱3,307,480 c. ₱3,643,480 d. ₱3,584,600 15. What is the non-controlling interest in net assets in the consolidated financial statement in 2016? a. ₱1,696,000 b. ₱1,860,000 c. ₱1,820,000 d. ₱1,889,120