On January 1, Year 2, Carlito Company acquired 80% interests in Harries Company for

P2,000,000 cash. The stockholder’s equity of Harries at the time of acquisition is

P1,875,000. On January 1, Year 2, NCI is measured at its implied fair value. The excess
of cost over books value of interest acquired is allocated to the following assets:

Inventories P100, 000 (sold in Year 2)

Building P200, 000 (5- year remaining
life)

During Year 2, Harries Company reported total comprehensive income of P500,000 and
paid dividend for P100,000.
What is the NCI in net assets of subsidiary on December 31, Year 2?
General Feedback
P552,000

On January 1, Year 2, Carlito Company acquired 80% interests in Harries Company for
P2,000,000 cash. The stockholder’s equity of Harries at the time of acquisition is
P1,875,000. On January 1, Year 2, NCI is measured at its implied fair value. The excess
of cost over books value of interest acquired is allocated to the following assets:

Inventories P100, 000 (sold in Year 2)

Building P200, 000 (5- year remaining
life)

During Year 2, Harries Company reported total comprehensive income of P500,000 and
paid dividend for P100,000.
What was the fair value of NCI on January 1, Year 2?

P500,000 P375,000 P525,000 P400,000

General Feedback
P500,000

A subsidiary was acquired for cash in a business combination on January 1, 2017. The
consideration given exceeded the fair value of identifiable net assets. The acquired
company owned equipment with a market value in excess of the carrying amount as of the
date of combination. A consolidated balance sheet prepared on December 31, 2017,
would Report the unamortized portion of the excess of the market value over the
carrying amount of the equipment as part of goodwill. Report the unamortized portion
of the excess of the market value over the carrying amount of the equipment as part of
plant and equipment. Report the excess of the market value over the carrying amount
of the equipment as part of plant and equipment. Not report the excess of the market
value over the carrying amount of the equipment because it would be expensed in the
year of the acquisition
General Feedback
Report the unamortized portion of the excess of the market value over the carrying
amount of the equipment as part of plant and equipment.

On January 1, Year 2, Carlito Company acquired 80% interests in Harries Company for
P2,000,000 cash. The stockholder’s equity of Harries at the time of acquisition is
P1,875,000. On January 1, Year 2, NCI is measured at its implied fair value. The excess
of cost over books value of interest acquired is allocated to the following assets:

Inventories P100, 000 (sold in Year 2)

Building P200, 000 (5- year remaining
life)

During Year 2, Harries Company reported total comprehensive income of P500,000 and
paid dividend for P100,000.
What is the consolidated total comprehensive income attributable to parent on December
31, Year 2, if Carlito’s net income for Year 2 is P600,000?

876,000 888,000 808,000 948,000

General Feedback
808,000

On January 1, Year 2, Owen Corp. purchased all of Sharp Corp.’s common stock for
P1,200,000. On that date, the fair values of Sharp’s assets and liabilities equaled their
carrying amounts of P1,320,000 and P320,000, respectively. During Year 2, Sharp
paid cash dividends of P20,000. Selected information from the separate balance sheets
and income statements of Owen and Sharp as of December 31, Year 2, and for the
year then ended follows:
Owen Sharp
Balance sheet accounts
Investment in subsidiary 1,320,000 -
Retained earnings 1,240,000 560,000
Total stockholders’ equity 2,620,000 1,120,000
Income statement accounts
Operating income 420,000 200,000
Equity in earnings of Sharp 140,000 -
Net income 400,000 140,000
In Owen’s December 31, Year 2 consolidated balance sheet, what amount should be
reported as total retained earnings? P1,240,000 P1,360,000 P1,380,000
P1,800,000
General Feedback
P1,240,000

On January 1, 2017, Palm, Inc. purchased 80% of the stock of Stone Corp. for 4,000,000
cash. Prior to the acquisition, Stone had 100,000 shares of stock outstanding. On the date
of acquisition, Stone’s stock had a fair value of 52 per share. During the year Stone
reported 280,000 in net income and paid dividends of 50,000. What is the balance in the
noncontrolling interest account on Palm’s balance sheet on December 31, 2017?
1,000,000 1,040,000 1,086,000 1,096,000
General Feedback
1,086,000

Andrew owns 100% of the share capital of the following companies. The directors are
unsure of whether the investments should be consolidated.
In which of the following circumstances would the investment NOT be consolidated?
Andrew has decided to sell its investment in Alpha as it is loss-making; the directors
believe its exclusion from consolidation would assist users in predicting the group’s
future profits Beta is a bank and its activity is so different from the engineering
activities of the rest of the group that it would be meaningless to consolidate it
Gamma is located in a country where a military coup has taken place and seized full
ownership of all private entities Delta is located in a country where local accounting
standards are compulsory and these are not compatible with IFRS used by the rest of the
group
General Feedback
Gamma is located in a country where a military coup has taken place and seized full
ownership of all private entities

On January 1, Year 2, Carlito Company acquired 80% interests in Harries Company for
P2,000,000 cash. The stockholder’s equity of Harries at the time of acquisition is
P1,875,000. On January 1, Year 2, NCI is measured at its implied fair value. The excess
of cost over books value of interest acquired is allocated to the following assets:

Inventories P100, 000 (sold in Year 2)

Building P200, 000 (5- year remaining
life)
During Year 2, Harries Company reported total comprehensive income of P500,000 and
paid dividend for P100,000
How much goodwill (gain on acquisition) is reported in the consolidated statement of
financial position on 1/1/Year 2?

P325,000 P200,000 P(325,000) P(375,000)

General Feedback
P325,000

A subsidiary was acquired for cash in a business combination on January 1, Year 1. The
consideration given exceeded the fair value of identifiable net assets. The acquired
company owned equipment with a market value in excess of the carrying amount as of the
date of combination. A consolidated balance sheet prepared on December 31, Year 1,
would Report the unamortized portion of the excess of the market value over the
carrying amount of the equipment as part of plant and equipment Report the
unamortized portion of the excess of the market value over the carrying amount of the
equipment as part of goodwill Report the excess of the market value over the carrying
amount of the equipment as part of plant and equipment Not report the excess of the
market value over the carrying amount of the equipment because it would be expensed in
the year of the acquisition
General Feedback
Report the unamortized portion of the excess of the market value over the carrying
amount of the equipment as part of plant and equipment