Inventory 12,500

Equipment 25,000
Common Stock 50,000
APIC 50,000
Retained Earnings 100,000
Goodwill 10,000
Investment In S 200,000
NCI 47,500

Dividend Income 16,000

dividends NCI 4,000
Dividend Declared 20,000

RE, beg 25,000

change in RE subsidiary NCI 6,250
xxx 31,250

RE 18,750
FV adjustment Depreciation Exp 6,250
Equipment 12,500
Inventory 12,500

Sales 40,000
intercompany sales COGS 40,000

beg. inventory RE 8,000

NCI 2,000
COGS 10,000

end inventory COGS 5,000

Inventory 5,000
RE 15,000
Equipment 15,000

Accumulated Dep. 4,500

RE 1,500
Depreciation Exp 3,000
 Change in net assets of Sub

CA
FV adjustments
-Inventory
-Equipment
FV net assets 2019

Parent
net income 116,000
dividend income (16,000)
depreciation exp 3,000
103,000

computation
sales
COGS
OPEX

NCI in Net income of sub 103750 x 20%

Consolidated NI

dr

elimination of Investment in S stocks 100,000

xxx
change in FV inventory and eqipment 18,750
beg. inventory 8,000
 dr

NCI in dividends 4,000

beg. inventory 2000
t assets of Sub
Jan
200,000 Consideration 200,000
237500x 20% NCI 47,500
12,500 FVNA (237,500)
25,000 Goodwill 10,000
237,500

NCI
105,000 net income
(6,250) depreciation
??? COGS
??? ???
103,750

consolidated
875,000
(455,000)
(213,250)
206,750
(20,750)
186,000

Retained Earnings
cr
280,000 parent RE
 283,500
186,000 net income
(60,000) dividends- parent
409,500

NCI
cr
47,500 1st journal entry

6,250 ???
20,750 NCI in NI of sub
68,500
Inventory 175,000
Other current assets 476,000
other long-term investments 20,000
land 220,000
building & equipment 572,500
Accumulated Depreciation (145,500)
Intangible assets 20,000
goodwill 10,000
1,348,000

current liab 220,000

non-current liab 350,000
common stock 200,000
APIC 100,000
RE 409,500
NCI 68,500
1,348,000
CONSOLIDATED FINANCIAL STATEMENTS
COMPREHENSIVE PROBLEM- COST METHOD
On January 1, 2019, P Company acquired 80% of the common stock of S Company for P200,000. On this date, S Company had
P Company S Company
Dr. Cr. Dr. Cr.
Inventory, Dec.31 130,000 50,000
Other Current Assets 241,000 235,000
Investment in S Company 200,000
Other Long Term Investments 20,000
Land 140,000 80,000
Buildings and Equipment 375,000 200,000
Accumulated Depreciation 120,000 30,000
Intangible Assets 20,000
Current Liabilities 150,000 70,000
Non Current Liabilities 200,000 150,000
Common Stock 200,000 50,000
Additional paid in Capital 100,000 50,000
Retained Earnings, Jan.1,2020 280,000 150,000
Sales 600,000 315,000
Cost of goods sold 350,000 150,000
Operating expenses 150,000 60,000
Dividend income (from S Company) 16,000
Dividends declared 60,000 20,000
1,666,000 1,666,000 815,000 815,000
The following trial balances were prepared for both companies for the y
Additional information:
1) The following assets of S Company have fair values different from book values on date of
Inventory- P12,500 more than book value
Equipment- P25,000 more than book value
FIFO is used for inventories. The equipment has a remaining useful life of
2) On Jan.1, 2020, P Company held merchandise acquired from S Company for P20,000. During 2020, S Companysold mercha
3) On June 30,2019, P Company sold equipment to S Company at a gain of P15,000. Depreciation is computed usingstraight li
Required:
Prepare a 3-part working paper for consolidated financial statements of the two companies

P Comapany and S company

Worksheet for Combined Statements
December 31,2020 Eliminations
 P Company S Company Dr
Statement of CI:
Sales 600,000 315,000 40,000
Dividend Income 16,000 16,000
Total Income 616,000 315,000
Cost of Goods Sold 350,000 150,000 5,000
Operating Expenses 150,000 60,000 6,250

Total costs and expenses 500,000 210,000

Net/consolidated Income 116,000 105,000
NCI in NI of Subsidiary
CI to Retained Earnings

Statement of Retained Earniongs:

RE, Jan.1,2020
P Company 280,000
S Company 150,000 150,000

CI from above 116,000 105,000

Total 396,000 255,000
Dividends Declared
P Company 60,000
S Company 20,000
Retained Earnings, Dec.31, 2019 (to SFP) 336,000 235,000

Statement of Financial Positiohn:

Inventory, Dec.31 130,000 50,000 12,500
Other Current Assets 241,000 235,000
Investment in S Company 200,000
Other Long Term Investments 20,000
Land 140,000 80,000
Equipment 375,000 200,000 25,000
Accumulated Depreciation -120,000 -30,000 4500
Intangible Assets 20,000
Goodwill 10,000
Total assets

Current Liabilities 150,000 70,000

Non Current Liabilities 200,000 150,000
Common Stock
 P Company 200,000
S Company 50,000 50,000
APIC 100,000 50,000 50,000
Retained Earnings (from above) 280,000 150,000
NCI 47,500 6,000

Total Liabilties and Equity

T-ACCOUNTS

Conso Retained Earnings beg NCI

100,000 280,000 2,000
6,250 150,000 4,000
18,750
8,000
13,500
283,500 68,500

COGS OPEX
350,000 40,000 150,000
150,000 10,000 60,000
5,000 6,250

455,000

Equipment Inventory
375,000 12,500 130,000
200,000 15,000 50,000
25,000 12,500

572,500
 On this date, S Company had total owner's equity of P200,000. The NCI is measured at proportionate share.

2020, S Companysold merchandise to P Company for P40,000. P Company still holds P10,000 of this merchandise at year end. S Company's
n is computed usingstraight line method, a five-year life and no sal

GOODWILL
Consideration Transferred
NCI in the Acquiree
Cr Combined TOTAL
Less: FV of Identifiable Net Set
875,000 Goodwill
0
875,000
50,000 455,000 ENTRY 1
3000 213,250 Inventory
Equipment
668,250 Common Stock
206,750 APIC
20,750 Retained Earnings
186,000 Goodwill
Investment in Subsidiary
NCI

283,500 ENTRY 2
0 Retained Earnings Beg (NCI share)
NCI

186,000 ENTRY 3
469,500 Dividend Income
NCI
60,000 Dividend declared
20,000 0
409,500 ENTRY 4
Retained Earnings
Depreciation
17,500 175,000 Equipment
476,000 Inventories
200,000 0
20,000 ENTRY 5 inventory
220,000 Upstream Sale
27,500 572,500
-145,500 Sales
20,000 Cost of Goods sold
10,000
1,348,000 Cost of Goods sold
Inventory
220,000
350,000 Retained Earnings
NCI
 200,000 Cost of Goods sold
0
100,000
409,500 ENTRY 6
27,000 68,500 Downstream NO EFFECT IN NCI

Retained Earnings
Accumulated Depreciation
1,348,000 Equipment (Gain)
Depreciation

ENTRY 5

NCI in NI of Subsidiary
NCI
NCI
47,500
6,250
20,750

OPEX

3,000

213,250

Inventory
 12,500
5,000

175,000
ndise at year end. S Company's usual gross profit is 50%.

Jan-01
200,000 CA of Net Asset
47,500 Add: Adjustment
 247,500 Inventory
-237,500 Equipment
10,000 Fv of Net Asset

Dr Cr

12,500
25,000
50,000
50,000
100,000
10,000
y 200,000
47,500

ENTRY 2 COMPUTATION:
6,250 Increase in Sub's RE 2019
Adjustment:

16,000 Adjusted:
4,000
20,000

18,750
6,250
12,500
12,500

40,000
40,000

5000
5000

8,000
2000
 10,000

FFECT IN NCI

13,500
4,500
15,000
3000

ENTRY 5 COMPUTATION
Net Income
20,750 Adjustment
20,750

NET INCOME
200,000
 12,500
25,000
237,500

N:
ase in Sub's RE 2019 50,000

Inventory 12,500
Dep 6250 18,750
31,250
x 20%
6250
 105,000

6,250
-10,000
5,000 1,250
103,750
20%
20,750