UNIVERSITY OF CALOOCAN CITY

COLLEGE OF BUSINESS AND ACCOUNTANCY

ACCOUNTING FOR BUSINESS COMBINATION

Business Combination & Consolidated FS – Date of Acquisition

Acquisition of Net Assets

Entity XY acquired the net assets of Entity AB by issuing 25,000 ordinary shares with par
value of P10 and bonds payable with a face amount of P1,250,000. The bonds are classified
as financial liability at amortized cost. At the time of acquisition, the ordinary shares are
publicly quoted at P20 per share. On the other hand, the bonds payable, classified as
financial liability at amortized cost, are trading at 110.

Entity XY paid P25,000 share issuance costs and P50,000 bond issue costs. Entity XY also
paid P100,000 acquisition related costs and P75,000 indirect costs of business
combination. Before the date of acquisition, Entity XY and Entity AB reported the following
data:

Entity XY Entity AB
Current assets P2,500,000 P1,250,000
Noncurrent assets 5,000,000 2,500,000
Current liabilities 500,000 1,000,000
Noncurrent liabilities 750,000 1,250,000
Ordinary shares 1,250,000 500,000
Share premium 3,000,000 750,000
Retained earnings 2,000,000 250,000

At the time of acquisition, the current assets of Entity XY have fair value of P3,000,000 while
the noncurrent assets of Entity AB have fair value of P3,250,000. On the same date, the
current liabilities of Entity AB have a fair value of P1,500,000 while the noncurrent liabilities
of Entity XY have fair value of P1,250,000.

Immediately after the merger, compute for the following:

1. Total assets
2. Total liabilities
3. Components of shareholders’ equity

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Acquisition of Stocks- Control Premium
Blake Corporation acquired 65 percent of State Corporation’s common stock on December 31, 2023.
State’s statement of financial position immediately before the combination reflected the following
balances:

Cash and receivables P 120,000

Inventory 210,000
Land 270,000
Building and equipment 750,000
Total Assets P 1,350,000

Accounts payable P 90,000

Income tax payable 120,000
Bonds payable 300,000
Ordinary shares 300,000
Retained earnings 540,000
Total equities P 1,350,000

A review of the fair value of State’s assets and liabilities indicated that inventory, land, and buildings and
equipment had fair values of P 195,000, P300,000, and P900,000 respectively. All other assets and
liabilities have book value equal to their fair value.

1. Assuming Blake paid P800,000 for 65% of the outstanding shares of State and the fair value of the
non-controlling interest at the date of acquisition was determined to be P400,000, how much is
the goodwill/(income for acquisition) to be reported in the consolidated statement of financial
position of Blake Corporation?
2. Assuming Blake paid P600,000 for 65% of the outstanding shares of State and the fair value of the
non-controlling interest at the date of acquisition was determined to be P320,000, how much is
the goodwill/(income for acquisition) to be reported in the consolidated statement of financial
position of Blake Corporation?
3. Assuming Blake paid P715,000 for 65% of the outstanding shares of State, how much is the
goodwill/(income for acquisition) to be reported in the consolidated statement of financial
position of Blake Corporation?
4. Assuming Blake paid P650,000 for 65% of the outstanding shares of State, how much is the
goodwill/(income for acquisition) to be reported in the consolidated statement of financial
position of Blake Corporation?

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Acquisition of Stocks- SPECIAL TOPICS
MEASUREMENT PERIOD – PROVISIONAL FAIR VALUE
PROBLEM A. On July 1, 2023, Chris Corporation acquired the net assets of Valix Company for P32million.
Some information on the assets, specifically the fair market value of land, is not available on this date. The
provisional fair value and carrying value of net assets on this date amounted to P23million and P20million,
respectively.

On December 31, 2023, additional facts and information revealed that the land on which Valix Company
has been located should be fairly valued at the date of acquisition at P3million instead of P2million as
previously estimated.

Through independent appraisal, the net assets of Valix Company were fairly valued at P26million on
August 1, 2024.
1. Calculate the adjusted result of business combination.

MEASUREMENT PERIOD – CONTINGENT CONSIDERATION

PROBLEM B. On April 1, 2023, San Andres Corporation acquired 100% of Sta. Maria Company’s assets and
liabilities for P40million. The fair value and carrying value of net assets amounted to P46million and
P48million, respectively. In addition to the purchase price, a contingent payment of P24million is to be
made once the stock price of S.A Corp. reaches P55 per share on or before December 31, 2024. Since
there is low probability of occurrence, the fair market value amounted to P10million only on the date of
acquisition.

On December 31, 2023, additional facts and information gathered revealed that the fair value of
contingent consideration should be P12million at the date of acquisition.

On May 2, 2024, S.A Corp. revised its estimate of the contingent consideration to P14million due to
increase in demand of the products of S.A Corporation in 2024 and therefore, the probability of reaching
the stock price target has increased.

Compute for the following:

1. Result of the business combination on April 1, 2023
2. Adjusted result of the business combination on December 31, 2023
3. Effect on the result of business combination on May 2, 2024
4. Assume instead that on December 31, 2017, the stock price of S.A Corp. reaches P56 per share
and S.A Corp pays the stockholders of Sta. Maria Company. Compute for the adjustment on
goodwill and the adjusted result of the combination.

STEP ACQUISITION
Problem C. On January 1, 2023, Ivan Corporation acquired 40% interest of Jordan Company for
P24million. Ivan has already held a 25% interest which had been acquired for P8million. The fair market
value of the non-controlling interest on this date amounted to P12million and the fair market value of the
net assets of Jordan was P42million.
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 1. What is the result of business combination?

PRE-EXISTING GOODWILL
Problem D. On January 2, 2023, MAGULANG Corporation purchased 70% of the outstanding ordinary
shares of ANAK Company for P4.2million cash. The non-controlling interest is measured at fair value.
Statement of Financial Position of the companies on January 1, 2023 are as follows:

MAGULANG CORPORATION ANAK COMPANY

Identifiable Assets P9,600,000 P9,000,000 P4,580,000 P5,000,000
Goodwill ---- --- P100,000 ?
TOTAL ASSETS P9,600,000 P4,680,000

Accounts Payable P1,160,000 P1,000,000 P 300,000 P 300,000

Ordinary Shares 2,400,000 1,200,000
Additional paid-in-capital 1,240,000 360,000
Retained Earnings 4,800,000 2,820,000
TOTAL LIABILITIES & SHE P9,600,000 P4,680,000

Required:
1. Compute for consolidated assets, consolidated liabilities and consolidated shareholder’s equity.
2. Prepare the necessary entries on the books and working papers.
3. WHAT IF SCENARIOS:
a. Non-controlling interest is measured at P1,400,000
b. Non-controlling interest is measured at P1,500,000
a.

PROBLEM 1

IDEAL Corporation is a company involved in manufacturing mining equipment. At the beginning of the year, the board of
directors of the said company has decided to enter into a business combination with SUPERIOR Corporation and BRIGHT
Corporation, top suppliers of materials in the mining industry which they use in production. The said acquisition is expected to
result in producing higher quality mining equipment with lower total cost. The deal was closed on February 28, 2023 and the
following information was gathered from the books of the entities:

IDEAL SUPERIOR BRIGHT

Current assets P8,250,000 P2,340,000 P1,560,000

Noncurrent assets 18,750,000 15,300,000 10,200,000
Total assets P27,000,000 P17,640,000 P11,760,000

Liabilities P1,950,000 P1,260,000 P840,000

Ordinary shares, P100 par 16,491,000 10,681,200 7,120,800
Share premium 1,059,000 1,018,800 679,200
Retained earnings 7,500,000 4,680,000 3,120,000
Total equities P27,000,000 P17,640,000 P11,760,000

IDEAL, who has the legal and economic entity, will issue 135,000 of its ordinary shares in exchange for the acquisition of
SUPERIOR and 67,200 of its ordinary shares in exchange for the acquisition of BRIGHT. The fair value of IDEAL’s shares is
P150. In addition, the following adjustments should be made to the current assets of Superior and Bright which has a fair value

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 of P2,700,000 and P1,380,000, respectively. The noncurrent assets has a fair value of P12,900,000 and P11,850,000 for
Superior and Bright, respectively.

Compute for the following balances in the books of the surviving company on the date of acquisition:

1. Stockholder’s equity
a. 25,050,000 b. 55,380,000 c. 53,070,000 d. 57,690,000

2. Assets
a. 61,740,000 b. 55,440,000 c. 55,830,000 d. 56,400,000

PROBLEM 2

The Statement of Financial Position of LUMINA Corporation on June 30, 2023 is presented below:

Current assets P195,000 Liabilities 525,000

Land 1,320,000 Ordinary shares, P5 par 900,000
Building 660,000 Share premium 825,000
Equipment 525,000 Retained earnings 450,000
Total assets P2,700,000 Total equities P2,700,000

All the assets and liabilities of Lumina assumed to approximate their fair values except for land and building. It is estimated
that the land have a fair value of P2,100,000 and the fair value of the building increased by P480,000. Enigma acquired 80%
of Lumina’s outstanding shares for P3,000,000. The non-controlling interest is measured at fair value.

1. Assuming the consideration paid includes control premium of P852,000, how much is the goodwill/(gain on acquisition) on the
consolidated financial statement?
a. 315,000 b. (750,000) c. 102,000 d. 252,000

2. Assuming the consideration paid excludes control premium of P138,000 and the fair value of the non-controlling interest is
P736,500, how much is the goodwill/(gain on acquisition) on the consolidated financial statement?
a. 469,500 b. 439,500 c. 301,500 d. 448,500

3. Assuming the consideration paid includes control premium of P222,000, how much is the goodwill/(gain on acquisition) on the
consolidated financial statement?
a. 259,500 b. 439,500 c. 340,500 d. 410,100

PROBLEM 3

Great Company has gained control over the operations of Superb Corporation by acquiring 85% of its outstanding capital stock
for P15,480,000. This amount includes a control premium of P180,000. Acquisition expenses, direct and indirect, amounted to
P498,000 and P252,000 respectively.
Great Superb
Book Value Book Value
Cash P21,249,000 P768,000
Accounts receivable 1,800,000 1,950,000
Inventories 3,300,000 2,160,000
Prepaid expenses 891,000 750,000
Land 14,100,000 5,274,000
Building 9,360,000 3,348,000
Equipment 1,800,000 1,110,000
Goodwill - 1,800,000
Total assets P52,500,000 P17,160,000

Accounts payable 4,050,000 1,518,000

Notes payable 8,400,000 4,380,000
Ordinary shares, 50 par 20,400,000 4,800,000
Share premium 9,450,000 3,600,000
Retained earnings 10,200,000 2,862,000

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 Total equities P52,500,000 P17,160,000

The following were ascertained on the date of acquisition for the Acquired Corporation.

• The value of receivables and equipment has decreased by P150,000 and P84,000 respectively.
• The fair value of inventories are now P2,616,000 whereas the value of land and building have increased by P2,826,000
and P642,000 respectively.
• There was an unrecorded accounts payable amounting to P162,000 and the fair value of notes is P4,428,000.

Compute for the following balances to be presented in the consolidated statement of financial position on the date of business
combination:

1. Total assets
a. 73,500,000 b. 60,558,000 c. 61,308,000 d. 76,788,000

2. Total Stockholder’s equity

a. 42,000,000 b. 45,000,000 c. 39,300,000 d. 40,050,000

PROBLEM 4

On January 2, 2023, the Statement of Financial Position of Arden Company and Wonder Company immediately before the
combination are:
Arden Co. Wonder Co.
Cash P 2,700,000 P 90,000
Inventories 1,800,000 180,000
Property and equipment (net) 4,500,000 630,000
Total Assets P 9,000,000 P 900,000

Current Liabilities P 540,000 P 90,000

Ordinary shares, P100 par 900,000 90,000
Share premium 2,700,000 180,000
Retained Earnings 4,860,000 540,000
Total Liabilities and Stockholder’s Equity P 9,000,000 P 900,000
The fair value of Wonder Company’s equipment is P918,000.

Assume the following independent cases.

1. Assuming Arden Company acquired 80% of the outstanding shares of Wonder Company for P820,800 and non-controlling
interest measured at the proportionate share of Wonder Company’s identifiable net assets, how much is the consolidated
stockholder’s equity on the date of acquisition?
a. 8,460,000 b. 8,517,600 c. 8,679,600 d. 8,737,200

2. Assuming Arden Company acquired 90% of the outstanding shares of Wonder Company for P1,458,000 and non-controlling
interest is measured at fair value, how much is the total consolidated assets on the date of acquisition?
a. 9,252,000 b. 10,710,000 c. 10,422,000 d. 8,9640,000

PROBLEM 5

Clark Company’s stockholder’s equity as of December 31, 2022 is P7,308,000. On January 1, 2023 Clark acquires 30% of Rome
Company’s ordinary shares for P540,000 cash and by issuing its own shares with a fair value of P1,350,000. Clark acquired
significant influence over Rome as a result of the stock acquisition. After four months, Clark purchases another 60% of Rome’s
ordinary shares for a cash payment of P3,942,000. On this date, Rome reports identifiable assets with carrying value of
P6,480,000 and fair value of P11,520,000 and it has liabilities with a book value and a fair value of P3,240,000.

At the acquisition date, net loss reported by Rome for the four-month ended amounted to P900,000. The fair value of the 10%
non-controlling interest is P1,296,000. Non-controlling interest is valued using the proportionate basis. Clark also paid the
following: P90,000 for legal fees, P72,000 for finder’s fee, P77,400 for accountant’s fee, P64,800 for audit fee for SEC
registration of stock issued and P19,800 for printing of stock certificates.

Immediately after the business combination, how much is the consolidated total equity?

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 a. 9,954,000 b. 10,782,000 c. 10,431,000 d. 9,243,000

PROBLEM 6

Blue Co. merged into Soda Corp. on June 30, 2023. In exchange for the net assets at fair market value of Blue Co. amounting
to P2,785,800, Soda issued 68,000 ordinary shares at P36 par value, with at a market price of P41 per share. Relevant data on
ordinary shareholder’s equity immediately before the combination show:
Soda Blue
Share capital 8,790,000 2,030,000
Share premium 3,834,000 782,000
Retained earnings (deficit) (1,516,000) 495,000

Out of pocket costs of the combination were as follows:

o Legal fees for the contract of business combination P 174,700

o Audit fee for SEC registration of stock issue 198,400
o Printing costs of stock certificates 144,900
o Broker’s fee 135,000
o Accountant’s fee for pre-acquisition audit 161,000
o Other direct cost of acquisition 90,400
o General and allocated expenses 115,300
o Listing fees in issuing new shares 172,000

• Included as part of the acquisition agreement is the additional cash consideration of P163,000 in the event Soda Co.’s
share price will reach P32 per share by year-end.

• At the acquisition date, the share price is P27.50, and increased by P4.80 by December 31, 2023.

• At acquisition date, there was only a low probability of reaching the target share price, so the fair value of the additional
consideration was determined at P74,000.

What is the amount of expense to be recognized in the statement of comprehensive income for the year ended December 31,
2023?
a. 676,400 b. 851,700 c. 765,400 d. 940,700

PROBLEM 7

On January 1, 2023, VECTOR acquired 90% of the equity share capital of FERN in a share exchange in which Vector issued
two new shares for every three shares it acquired in Fern. Additionally, on December 31, 2023, Vector will pay the shareholders
of Fern P13.2 per share acquired. Vector’s cost of capital is 10% per annum. At the date of acquisition, shares in Vector and
Fern had a stock market value of P48.75 and P18.75 each, respectively. Income statements for the year ended September 30,
2023.

Vector Fern
Revenue P4,845,000 2,850,000
Cost of sales (3,840,000) (1,950,000)
Gross profit 1,005,000 900,000
Distribution costs (102,000) (130,500)
Administrative expenses (285,000) (180,000)
Investment income 37,500 ----
Finance costs (31,500) ----
Profit before tax 624,000 589,500
Income tax expense (210,000) (120,000)
Profit for the year 414,000 469,500

Equity as at October 1, 2022

Equity shares of P7.50 each 1,800,000 562,500
Retained earnings 4,050,000 2,625,500

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 At the date of acquisition, the fair values of Fern’s assets were equal to their carrying amounts with the exception of Land
which had a fair value of P135,000 above its carrying amount. Also, Fern had a contingent liability which Vector estimated to
have a fair value of P337,500. This has not changed as at 30 September 2023. Fern has not incorporated these fair value
changes into its financial statements. Vector’s policy is to value the non-controlling interest at fair value at the date of
acquisition. For this purpose, Fern’s share price at that date can be deemed to be representative of the fair value of the shares
held by the non-controlling interest.

Compute the goodwill (gain on acquisition) resulting on the date of acquisition.

a. (160,500) b. 235,125 c. 211,613 d. 42,000

PROBLEM 8
Consolidated FS – Subsequent to Date of Acquisition

Galaxy Corporation acquired 80% of the outstanding shares of United Company on June 1, 2023 for P3,517,500. United
Company’s stockholders equity components at the end of this year as follows: Ordinary shares, P100 par, P1,500,000, Share
premium P675,000 and Retained earnings P1,335,000. Non-controlling interest is measured at fair value and the fair value is
P705,000. The assets of united were fairly valued, except for inventories, which are overstated by P66,000 and equipment
which was understated by P90,000. Remaining useful life of equipment is 4 years. Stockholder’s equity of Galaxy on January
1, 2023 is composed of ordinary shares P4,500,000, Share Premium P1,050,000, Retained Earnings P3,150,000. Goodwill, if
any, should be written down by P85,350 at year-end. Net income for the first year of parent is P450,000 and the net income
of subsidiary from the date of acquisition is P255,000. Dividends declared at the end of the year amounted to P120,000 and
P90,000. During the year, there was no issuance of new ordinary shares.

1. How much is the non-controlling interest in net assets on December 31, 2023?
a. 871,005 b. 763,455 c. 745,455 d. 731,505

2. What is the amount of consolidated shareholder’s equity?

a. 9,122,070 b. 9,853,575 c. 8,773,575 d. 9,867,525

Inter-company sale of Inventories

PROBLEM 9

Patti Company holds 80% of the common stock of Shannon, Inc. In the current year, Patti reports sales of P10,000,000 and
COGS of P7,500,000. For the same period, Shannon has sales of P200,000 and COGS of P160,000. During the year, Patti sold
merchandise to Shannon for P60,000 at a price based on the normal markup. At the end of the year, Shannon still possesses
30% of this inventory.

Required: Compute for the following:

1. Consolidated sales 10,140,000

2. Consolidated COGS 7,604,500
3. Consolidated GP 2,535,500
4. Assume the same information, except that Shannon sold inventory to Patti. Compute for the consolidated sales. 10,140,000

PROBLEM 10

P Company regularly sells merchandise to its 80%-owned subsidiary, S Corporation. In 2021, P sold merchandise that cost
P192,000 to S for P240,000. Half of this merchandise remained in S’s December 31, 2021 inventory. During 2022, P sold
merchandise that cost P300,000 to S for P375,000. Forty percent of this merchandise inventory remained in S’s December
31, 2022 inventory. Selected income statement information for the two affiliates for the year 2022 is as follows:
P S
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 Sales Revenue P 1,800,000 P 900,000
Cost of Goods Sold 1,440,000 750,000
Gross Profit P 360,000 P 150,000

1. Consolidated sales revenue for P and S for 2022 P2,325,000

2. Consolidated COGS for P and S for 2022 P1,821,000

PROBLEM 11

Pap Company owns an 80% interest in Sap Company. During 2021, S sells merchandise to P for P150,000 at a profit of
P30,000. On December 31, 2021, 50% of this merchandise is included in P’s inventory. Income statements for Pap and Sap
are summarized below:
Pap Sap
Sales P 900,000 P 450,000
Cost of Sales (450,000) (300,000)
Operating Expenses (225,000) (60,000)
Net Income P 225,000 P 90,000

1. Consolidated sales P1,200,000

2. Consolidated COGS P615,000
3. Controlling interest in consolidated net income for 2021 P285,000
4. Non-controlling interest in net income for 2021 P15,000

Inter-company sale of Plant Assets

PROBLEM 12

Mortar Corp. acquired 80% of Granite Corporation’s voting stock on January 1, 2021. On December 31, 2022, Mortar
received P390,000 from Granite for an equipment Mortar had purchased on January 1, 2012 for P400,000. The equipment is
expected to have a 10-year useful life and no salvage value. Both companies depreciate on a straight-line basis.

1. In the preparation on the 2022 consolidated financial statements, equipment will be:
2. The gain on sale of the equipment recorded by Mortar for 2022 is:
3. In the preparation of the 2023 consolidated FS, equipment will be:
4. In the preparation of the 2023 consolidated income statement, depreciation expense will be:
5. In the preparation of the 2023 consolidated balance sheet, accumulated depreciation will be:

PROBLEM 13

Stroud Corporation is an 80%-owned subsidiary of Pennie, Inc., acquired by Pennie several years ago. On January 1, 2021,
Pennie sold land with a book value of P60,000 to Stroud for P90,000. Stroud resold the land to an unrelated party for
P100,000 on September 26, 2022.

1. The land will be included in the December 31, 2021 consolidated balance sheet of Pennie, Inc. and Subsidiary at
2. The gain from sale of land that will appear in the consolidated income statement for 2021 and 2022, respectively:

PROBLEM 14

Sky Corporation owns 75% of Earth Company’s stock. On July 1, 2021, Sky sold a building to Earth for P33,000. Sky had
purchased this building on January 1, 2012, for P36,000. The building’s original eight-year estimated total economic life
remains unchanged. Both companies use straight-line depreciation. The equipment residual value is considered negligible.

1. In the preparation of the 2021 consolidated FS, building will be in the eliminating entries.
2. The gain on sale of the building eliminated in the consolidated FS for 2021
3. While preparing the 2021 consolidated income statement, depreciation expense will be:
4. In the preparation of the 2022 consolidated income statement, depreciation expense will be:
5. In the preparation of a consolidated balance sheet at January 1, 2022, retained earnings will be:

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 PROBLEM 15

GV Company purchased 70% ownership of DL Company on January 1, 2023 at underlying book value. While each company
had its own sales forces and independent product lines, that were substantial intercorporate sales of inventory each period.
The following intercoporate sales occurred during 2024 and 2025:

Cost of Sales Unsold at Year Sold

Year Seller Product Sold Buyer Price End of Year to Outsiders
2024 GV Co. 448,000 DL Co. 640,000 140,000 2025
2025 DL Co. 312,000 GV Co. 480,000 77,000 2026
2025 GV Co. 350,000 DL Co. 437,500 63,000 2026

The following data summarized the results of their financial operations for the year ended December 31, 2025:
GV Company DL Company
Sales 3,850,000 1,680,000
Gross Profit 1,904,000 504,000
Operating Expenses 770,000 280,000
Ending Inventories 336,000 280,000
Dividend Received from affiliate 126,000 -
Dividend Received from non-affiliate - 70,000

1. What are the consolidated sales and consolidated cost of goods sold at the end of 2025?
a. 4,612,500 and 2,457,550 c. 4,612,500 and 2,202,050
b. 4,612,500 and 2,206,950 d. 5,530,000 and 2,202,050

2. What is the consolidated net income attributable to parent shareholder’s equity and non-controlling interest in net income at
the end of 2025?
a. 1,301,335 and 59,115 c. 1,476,335 and 80,115
b. 1,476,335 and 59,115 d. 1,350,335 and 80,115

PROBLEM 16

On January , 2023, RX Company purchased 80% of the shares of MB Corporation at book value. The shareholders’ equity of
MB Corporation on this date showed: Ordinary Shares – P570,000 and Retained Earnings – P490,000. On April 30, 2023, RX
Company acquired a used machinery for P84,000 from MB Corp. that was being carried in the latter’s books at P105,000. The
asset still has a remaining useful life of 5 years. On the other hand, on August 31, 2023, MB Corp. purchased an equipment
that was already 20% depreciated from RX Co. for P345,000. The original cost of this equipment was P375,000 and had a
remaining life of 8 years. Net income of RX Co. and MB Corp. for 2023 amounted to P360,000 and P155,000. Dividends paid
totaled to P115,000 and P52,500 for RX Co. and MB Corp., respectively.

In the consolidated financial statements in 2023, what is the non-controlling interest in the net assets?
a. 236,140 b. 232,500 c. 223,500 d. 263,140

PROBLEM 17

A summary of the separate income statement of Techno Corporation and its 75% owned subsidiary, Duo Company, for 2024
were as follows:
Techno Duo
Sales P 9,000,000 P5,400,000
Gain on sale of equipment 180,000 -
Cost of goods sold (3,600,000) (2,340,000)
Depreciation expense (900,000) (540,000)
Other expenses (1,440,000) (720,000)
Income from operations P3,240,000 P1,800,000
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 There was an upstream sale of equipment with a book value of P720,000 for P1,170,000 on January 2, 2022. At the time of
intercompany sale, the equipment had a remaining useful life of 5 years. Techno uses straight-line depreciation. The buying
affiliate used the equipment until December 31, 2024, at which time it was sold to Genex for P648,000.

What is the amount of net profit attributable to non-controlling interests for 2024?
a. P517,500 b. 472,500 c. 50,000 d. 562,500

PROBLEM 18

On July 1, 2023, Density Company, purchased 80% of the outstanding shares of Evolve Company at cost of P4,000,000. On
that date, Evolve had P2,500,000 of Ordinary Shares and P3,500,000 of Retained Earnings. For 2023, Density had income of
P1,400,000 from its separate operations and paid dividends of P750,000. For 2023, Evolve reported income of P325,000 and
paid dividends of P150,000. All assets and liabilities of Evolve have a book values equal to their respective market values. On
October 1, 2023, there was an upstream sale of machinery for P500,000. The book value of the machinery on that date was
P600,000. The machinery is expected to have a useful life of 5 years from the date of sale.

In the December 31, 2023 consolidated statement of financial position, how much is the consolidated net income attributable
to the controlling interest?
a. 1,606,000 b. 2,326,000 c. 2,366,000 d. 2,406,000

THEORIES:

1. IFRS 3 defines it as a transaction or other event in which an acquirer obtains control of one or more businesses.
a. Business combination c. Merger
b. Consolidation d. Acquisition of net assets

2. Under IFRS 3, how shall an entity (acquirer) account for each business combination?
a. Pooling of interest method c. Acquisition method
b. Proportionate consolidation method d. Equity method

3. Applying acquisition method for business combination requires the following steps except
a. Identifying the acquirer
b. Determining the acquisition date
c. Recognising and measuring the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the
acquire.
d. Recognising and measuring goodwill or gain from a bargain purchase.
e. Using equity method

4. In different types of business combination, which of the following is not considered as an acquirer?
a. The newly formed corporation in case of merger.
b. The absorbed corporation in case of consolidation.
c. The corporation that acquires more than 50% of the other corporation’s ordinary shares.
d. The corporation that controls the acquiree.

5. Which of the following statements concerning the identification of the acquirer in a business combination is incorrect?
a. In business combination through merger, the acquirer is the absorbed corporation after the business combination.
b. In business combination through consolidation, the acquirer is the newly formed corporation.
c. In business combination effected primarily by transferring assets or by incurring liabilities or issuing shares, the acquirer is
usually the entity that transfers the cash, incurs the liabilities or issues the shares.
d. In some business combination, commonly called “reverse acquisition” the issuing entity is the acquiree while the other
entity that receives the issued shares is the acquirer.

6. It refers to the date on which the acquirer obtains control of the acquiree.
a. Business combination date b. Acquisition date c. Control date d. Consolidation date

7. As of the acquisition date, the acquirer shall recognize, separately from goodwill, the identifiable assets acquired, the liabilities
assumed and any non-controlling interest in the acquiree. As a general rule, the acquirer shall measure the identifiable assets
acquired and the liabilities assumed at their
a. Acquisition date-fair values c. Acquisition date-face value
b. Acquisition date-book value d. Acquisition date-carrying value

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8. For each business combination, the acquirer shall measure at the acquisition date components of noncontrolling
interests(NCI) in the acquire that are present ownership interests and entitle their holders to a proportionate share of the
entity’s net assets in the event of liquidation at either
a. Fair value
b. The present ownership instruments’ proportionate share in the recognised amounts of the acquiree’s identifiable net
assets.
c. Either A or B.
d. Neither A or B.

9. Under IFRS 3, contrary to IAS 37, what is the recognition principle of contingent liability assumed in a business combination?
a. The acquirer shall recognise as of the acquisition date a contingent liability assumed in a business combination if it is a
present obligation that arises from past events and its fair value can be measured reliably even only reasonably possible.
b. The acquirer shall recognise a contingent liability assumed in a business combination at the acquisition date only if it is
probably that an outflow of resources embodying economic benefits will be required to settle the obligation.
c. The acquirer shall recognise a contingent liability assumed in a business combination at the acquisition date only if it is
virtually certain that an outflow of resources embodying economic benefits will be required to settle the obligation.
d. The acquirer shall recongise a contingent liability assumed in a business combination at the acquisition date only if it is
remote the an outflow of resources embodying economic benefits will be required to settle the obligation.

10. What is the measurement of the consideration transferred or given up in a business combination?
a. Acquisition date-fair values c. Acquisition date-face value
b. Acquisition date-book value d. Acquisition date-carrying value

11. If the aggregate of the (a) consideration transferred measured in accordance with this IFRS, which generally requires
acquisition-date fair value; (b) the amount of any non-controlling interest in the acquiree measured in accordance with IFRS
3; and (c) in a business combination achieved in stages, the acquisition-date fair value of the acquirer’s previously held equity
interest in the acquiree is less than the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities
assumed measured in accordance with IFRS 3 (FVNAA), the difference shall be classified as
a. Goodwill to be presented as noncurrent asset c. Gain on acquisition to be presented as part of OCI
b. Gain on bargain purchase to be presented as part of P/L d. Share premium from issuance of shares

12. If at the date of acquisition, the aggregate of (1) the fair value of consideration transferred, (2) the amount of NCI measured
at either (a) fair value or (b) proportionate share of fair value of net assets of acquiree, and (3) in a business combination
achieved in stages, the acquisition date fair value of the previously held equity interest, exceeds the fair value of net assets of
the acquiree, the difference shall be treated by the acquirer as
a. Goodwill from business combination classified as non-current asset in the Consolidated Statement of Financial Position
which will not be amortized but will be subject to annual impairment test.
b. Gain on bargain purchase to be recognised at acquisition date Consolidated Statement of Comprehensive Income as part
of profit or loss but attributable to parent’s shareholders only.
c. Negative goodwill to be subject to amortization for a presumed life of 10 years.
d. Impairment loss to be recorded at acquisition date Consolidated Income Statement.

13. How shall the acquirer account for its previously held equity interest in the acquiree upon obtaining control of the acquiree or
how shall an acquirer account for a business combination achieved in stages a.k.a. step acquisition?
a. The acquirer shall treat the transaction as change in accounting policy to be treated retrospectively at acquisition date.
b. The acquirer shall account the transaction as prior period error to be treated by retroactive restatement.
c. The acquirer shall remeasure its previously held equity interest in the acquire at its acquisition-date fair value and
recognize the resulting gain or loss in Profit/Loss.
d. The acquirer shall not include the previously held equity interest in the computation of goodwill or gain on bargain
purchase arising from business combination.

14. Under IFRS 3, what is the treatment of acquisition related costs in a business combination under IFRS 3?
a. It shall be expensed as incurred and presented as part of profit or loss.
b. It shall be capitalized as part of consideration given up in computation of goodwill or gain on bargain purchase.
c. It shall be debited to share premium.
d. It shall be charged directly to retained earnings.

15. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination
occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is
incomplete. What is the maximum term or period of the measurement period?
a. One year or 12 months from the acquisition date c. 3 months from the acquisition date

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 b. 6 months from the acquisition date. d. 1 month from the acquisition date.

16. Some changes in the fair value of contingent consideration that the acquirer recognises after the acquisition date may be the
result of additional information that the acquirer obtained after that date about facts and circumstances that existed at the
acquisition date. These are called measurement period adjustments that can be adjusted during the measurement period.
Which of the flowing transactions is considered as a measurement period adjustment that the acquirer shall retrospectively
adjust to goodwill/(gain on bargain purchase) during the measurement period which shall not exceed one year from the
acquisition date?
a. Changes in the value contingent consideration occurring within one year from the acquisition date as a result of events
occurring after the acquisition date such as meeting an earnings target, a specified share price or reaching milestone on a
research and development project.
b. Increase in the fair value of the financial liability at fair value through profit or loss issued as consideration for business
combination due to movement of prices in the exchange market.
c. Change in the carrying amount of the financial liability at amortized cost issued as consideration for business combination
due to amortization of the premium/(discount) on financial liability.
d. Changes in the provisional amount of contingent liability or contingent consideration as a result of new information
obtained about the facts and circumstances that existed as of the acquisition date and, if known, would have affected the
measurement of the amounts recognized as of that date.

17. How shall an acquirer in a business combination account for the changes in fair value contingent consideration classified as
financial liability if the changes result from events after the acquisition date?
a. The changes in fair value of contingent consideration classified as financial liability shall be recognized as gain or loss in
profit or loss because they are not measurement period adjustments.
b. The changes in fair value of contingent consideration classified as financial liability shall be retroactively adjusted to
goodwill/gain on bargain purchase because they are measurement period adjustments.
c. The changes in fair value of contingent consideration classified as financial liability shall be retrospectively restated to
beginning retained earnings because they are prior period error.
d. The changes in fair value of contingent consideration classified as financial liability shall be retroactively applied to
beginning retained earnings because they are change in accounting policy.

18. How shall an acquirer in a business combination account for the changes in fair value contingent consideration classified as
equity instrument if the changes result from events after the acquisition date?
a. The changes in fair value of contingent consideration classified as equity shall be recognized as gain or loss in profit or loss
because they are not measurement period adjustments.
b. Contingent consideration classified as equity shall not be remeasured and its subsequent settlement shall be accounted for
within the equity because they are not measurement period adjustments.
c. The changes in fair value of contingent consideration classified as equity shall be retrospectively restated to beginning
retained earnings because they are prior period error.
d. The changes in fair value of contingent consideration classified as equity shall be retroactively adjusted to goodwill/gain on
bargain purchase because they are measurement period adjustments.

19. Which of the following accounting treatments for costs related to business combination is incorrect?
a. Acquisition related costs such as finder’s fees; advisory, legal, accounting, valuation and other professional and consulting
fees; and general administrative costs, including the costs of maintain an internal acquisitions department shall be
recognized as expense in the Profit/Loss in the periods in which the costs are incurred.
b. The costs related to issuance of stocks or equity securities shall be deducted/debited from any share premium from the
issue and any excess is charged to “share issuance cost” reported as contract-equity account against either (1) share
premium from other share issuances or (2) retained earnings.
c. The costs related to issuance of financial liability at fair value through profit or loss shall recognized as expense while those
related to issuance of financial liability at amortized cost shall be recognized as deduction from the book value of financial
liability or treated as discount on financial liability to be amortized using effective interest method.
d. The costs related to the organization of the newly formed corporation also known as pre-incorporation costs shall be
capitalized as goodwill or deduction from gain on bargain purchase.

20. Which of the following statements is true in relation to business combination?

a. A business combination is a transaction or other event in which an acquirer obtains control of one or more businesses.
b. The acquisition method of accounting must be applied to all business combinations.
c. The acquirer is the entity that obtains control of the acquiree.
d. All of these statements are true in relation to business combination.

21. Which of the following situations would require the use of the acquisition method in a business combination?
a. The acquisition of a group of assets.
b. The formation of a joint venture.
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 c. The purchase of more than 50% of a business.
d. All of the above would require the use of the acquisition method.

22. It is a business combination in which all of the combining entities or businesses are ultimately controlled by the same party or
parties both before and after the combination and the control is not transitory.
a. Business combination involving entities under common control.
b. Business combination involving entities under diversified control.
c. Full business combination.
d. Business reorganization.

23. The acquisition method of accounting for a business combination requires all, except
a. Identifying the acquirer.
b. Determining the acquisition date.
c. Recognizing and measuring the identifiable assets acquired, the liabilities assumed and the non-controlling interest in the
acquiree at carrying amount.
d. Recognizing goodwill or gain from bargain purchase.

24. Which of the following is not one of the steps in accounting for acquisition?
a. Prepare proforma financial statements prior to acquisition.
b. Determine the acquisition date.
c. Identify the acquirer.
d. Expense the costs and general expenses of the acquisition in the period of acquisition.

25. Which statement is Incorrect concerning an acquirer?

a. In a business combination effected by transferring cash or other assets, the acquirer is usually the entity that transfers the
cash or other assets.
b. In a business combination effected by issuing equity interest, the acquirer is usually the entity that issues the equity interest.
c. The acquirer is usually the combining entity whose relative size is significantly greater than that of the combining entity or
entities.
d. If a new entity is formed to issue equity interests to effect a business combination, the new entity formed is necessarily the
acquirer.

26. In identifying the acquirer in a business combination, all of the following are considered, except
a. The terms of the exchange of equity securities
b. The relative amount of intangible assets on the individual entity financial statements..
c. The relative voting rights in the combined entity after the combination.
d. The composition of the governing body of the combined entity.

27. What date should be used as the acquisition date for a business combination?
a. The date when the acquirer signs the contract to purchase the business.
b. The date when the acquirer obtains control of the acquiree.
c. The date when all contingencies related to the transaction are resolved.
d. The date when the acquirer purchased more than 20% of the stock of the accquiree.

28. When should an acquirer derecognize a contingent liability recognized as the result of an acquisition?
a. When it becomes more likely than not that the entity will not be liable.
b. When the contingency is resolved.
c. At the end of the year of acquisition.
d. When it is reasonably possible that the liability will not require payment.

29. In a business combination, goodwill is measured as

a. The consideration transferred minus the identifiable net assets acquired.
b. The total of the consideration transferred plus the amount of any non-controlling interest in the acquiree minus the
identifiable net assets acquired.
c. The total of the consideration received plus the fair value of the previously held interest in the acquiree minus the identifiable
net assets acquired.
d. The total of the consideration transferred, plus the amount of any non-controlling interest in the acquiree plus the fair value
of previously held interest in the acquiree minus the identifiable net assets acquired.

30. How should an entity account for the incomplete information in preparing the financial statements immediately after the
acquisition?
a. Do not record the uncertain items until complete information is available.
b. Record a contra account to the investment account for the amounts involved.
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 c. Record the uncertain items at the carrying amount of the acquiree.
d. Record the uncertain items at a provisional amount measured at the date of acquisition.

31. When does the measurement period end for a business combination in which there was incomplete accounting information on
the date of acquisition?
a. When the acquirer receives the information or one year from the acquisition date, whichever occurs earlier.
b. On the final date when all contingencies are resolved.
c. Thirty days from the date of acquisition.
d. At the end of the reporting period in the year of acquisition.

32. These are the financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the
parent and its subsidiaries are presented as those of a single economic entity.
a. Consolidated financial statements.
b. General purpose financial accounting.
c. Separate financial statements.
d. Group financial statements.

33. Consolidated financial statements are typically prepared when one entity has a controlling financial interest in another unless
a. The subsidiary is a finance entity.
b. The fiscal year-ends of the two entities are more than three months apart.
c. The investee is in bankruptcy.
d. The two entities are in unrelated industries such as manufacturing and real estate.

34. This is defined as the financial statements presented by a parent in which the investments are accounted for on the basis of
the direct equity interest.
a. Single financial statements c. Separate financial statements
b. Combined financial statements d. Consolidated financial statements

35. A “group” for consolidation purposes is

a. A parent and all of its subsidiaries.
b. An entity that has one or more subsidiaries.
c. An entity, including an unincorporated entity such as partnership that is controlled by another entity.
d. An entity that obtains control over other entities or businesses.

36. Which of the following is not a valid condition that will exempt an entity from preparing consolidated financial statements?
a. The parent entity is a wholly owned subsidiary of another entity or partially owned and the other owners do not object to
the non-consolidation.
b. The parent entity’s debt or equity capital is not traded on the stock exchange.
c. The ultimate parent entity produces consolidated financial statements available for public use that comply with PFRS.
d. The parent entity is in the process of filing financial statements with a securities commission for the purpose of issuing
any class of instruments in a public market.

37. A parent is exempted from preparing consolidated financial statements if all of the following conditions exist, except
a. The parent is wholly or partially owned and the owners do not object to the non-consolidation.
b. The parent does not have any debt or equity instruments publicly traded.
c. The parent reports one class of share capital in the statement of financial position.
d. The ultimate parent prepares consolidated financial statements that comply with PFRS.

38. A subsidiary shall be excluded from consolidation when

a. The investor is a venture capital organization, mutual fund, unit trust or similar entity.
b. The business activities of the subsidiary are dissimilar from those of the other entities within the group.
c. The subsidiary is acquired with the intention to dispose of it within 12 months from date of acquisition.
d. The subsidiary is operating under severe long-term restrictions that significantly impair its ability to transfer funds to the
parent.

39. Control is presumed to exist when the parent owns directly or indirectly through subsidiaries
a. More than half of the equity of an entity.
b. More than half of the ordinary shares of an entity.
c. More than half of the preference and ordinary shares of an entity.
d. More than half of the voting power of an entity.

40. Control exists even if the parent owns half or less of the voting power of an entity under what condition?
a. The parent has the power over more than half of the voting rights by virtue of an agreement with other investors.
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 b. The parent has the power to govern the financial and operating policies of the entity under a statute or an agreement.
c. The parent has the power to appoint or remove the members of the board of the entity or the power to cast the majority of
the votes at meetings of the board of directors.
d. Under of all these conditions.

41. Non-controlling interest shall be presented

a. Separately from liabilities and the parent shareholder’s equity
b. Within equity, separately from the parent shareholder’s equity
c. As noncurrent liability
d. As component of the parent shareholder’s equity

42. The non-controlling interest should be recorded at what amount?

a. The fair value of the shares held by the acquirer.
b. The fair value of the shares not held by the acquirer or the proportionate share of the fair value of net identifiable assets
of the acquiree.
c. The proportionate share of the carrying amount of net identifiable assets of the acquiree.
d. The fair value of the shares held by the non-controlling interest plus goodwill.

43. What is the initial measurement of the retained investment in subsidiary when control is lost?
a. Fair value at the date when control is lost.
b. Fair value at the beginning of the reporting period.
c. Carrying amount at the date when control is lost.
d. Carrying amount at the beginning of the reporting period.

44. IFRS 10 defines them as financial statements of a group in which the assets, liabilites, equity, income, expenses and cash flows
of the parent and its subsidiaries are presented as those of a single economic unit.
a. Consolidated financial statements c. Group financial statements
b. Separate financial statements d. Combined financial statements

45. Which of the following statements concerning the preparation of consolidated financial statements by a parent is incorrect?
a. The parent corporation, as a general rule, shall present consolidated financial statements including all its subsidiaries
regardless of its industry or dissimilarity.
b. A subsidiary shall be excluded by a parent from the consolidation simply because the investor is a venture capital organization,
mutual fund, unit trust or similar entity.
c. An investment entity, which (1) obtains funds from one or more investors, (2) commits to its investors that its business is to
invest funds solely for returns/capital appreciation, and (3) measures and evaluates the performance substantially all of its
investment on a fair value basis is exempted from preparing consolidated financial statements.
d. A parent corporation, (1) which is wholly-owned or partially-owned subsidiary, (2) whose debt or equity instrument are not
publicly traded, (3) which is not in the process of initial public offering, and (4) when its immediate or ultimate parent
produces consolidated financial statements available for public use is exempted from presenting consolidated financial
statements.

46. Under IFRS 10, parent corporation is the entity that controls one or more entities. How does IFRS 10 define control?
a. An investor controls an investee when it is exposed, or has right to variable return from the investment with the investee
and has the ability to affect those returns through the power over the investee.
b. An investor controls an investee when it has the power to govern the financial and operating policies of an entity so as to
obtain benefits from its activities.
c. An investor controls an investee when it has the ability to influence the financial and operating policies of an entity so as to
obtain benefits from its activities.
d. An investor controls an investee when it owns more than 50% of all the outstanding capital stocks, whether common or
preferred.

47. Under IFRS 10, it refers to the term used to describe the ownership of the largest block of voting rights in a situation where
the remaining rights are widely dispersed even if it is less than the majority interest thereby requiring the holder of such interest
to prepare consolidated financial statements?
a. De jure control b. De facto control c. Legal control d. Nominal control

48. Parent corporation has 51% interest in listed entity Sub Inc. Sub is highly-leveraged and started making losses. Parent decided
to sell 2% to an investment bank. The post-sale structure shows that Parent Corp. has only 49% interest, investment bank has
2% interest and the remaining 49% interest owned by many shareholders other than the investment bank each with less than
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 1% of votes and there is no arrangement among them to vote collectively. Upon the sale, Parent corporation can easily
reacquire controlling interest in Sub by buying shares in the market and expects to continue managing Sub through election of
directors in Sub’s general meeting. Sub Inc. is listed with deep and liquid market for shares. Is the Parent still required to
consolidated Sub Inc. in its consolidated financial statements?
a. No because it has no control considering it only has 49% interest in Sub.
b. Yes because there is de facto control on the part of the Parent Corp. over the relevant activities of Sub Inc.
c. No because control is not shown by relevant facts.
d. Yes even if the other shareholders will connive to gain control.

49. An investee’s only business activity is to purchase receivables and service them on a day-to-day basis. Servicing involves
collection and passing on of principal and interest payments. Upon default, the investee automatically puts the receivable to
investor X as agreed separately in a put agreement with investor X. Is investor X required to consolidate investee in its
consolidated financial statements?
a. Yes because X controls the investee’s relevant activity that is managing the receivables upon default which significantly
affects the investee’s returns.
b. No because there is no statement as regards to majority ownership of stocks.
c. Yes but only if X owns 51% or more of voting stocks of investee.
d. No because there is no link of power over the investee to the exposure/right to variable returns of investment.

50. How shall the parent corporation present the Non-controlling Interest (NCI) in the Consolidated Statement of Financial Position?
a. It shall be presented within the Consolidated Stockholders’ Equity, separately from the equity of the owners of the parent.
b. It shall be presented as non-current liability.
c. It shall be presented as non-current asset.
d. It shall be presented as contract equity account like treasure shares and subscription receivable.

51. Which of the following income items shall not affect both CNI to Parent (CONSORE) and NCINI/(NCINAS)?
a. Gain on bargain purchase arising from business combination
b. Unrealized/realized income/expense arising from transactions between two subsidiaries owned by the same parent.
c. Unrealized/realized income/expense arising from downstream transactions or from parent subsidiary.
d. Impairment loss of goodwill from business combination initially measured using proportionate share of fair value of net asset
acquired.

52. Which of the following income items shall affect CNI to Parent/(CONSORE) only but not NCINI/(NCINAS)?
a. Amortization of difference between the fair value and book value of the assets and liabilities of the subsidiary.
b. Unrealized/realized income/expense arising from upstream transactions or from subsidiary to parent.
c. Impairment loss of goodwill from business combination initially measured using fair value of NCI.
d. Dividend income of parent coming from subsidiary.

53. IAS 27 as amended defines Separate Financial Statements as those presented by a parent or an investor with joint control of,
or significant influence over, in addition to its consolidated financial statements. Under IAS 27 as amended, Investment in
Subsidiary shall be accounted for by the parent in its separate financial statements using
a. Equity Method under IAS 28 c. Fair value model under IFRS 9
b. Cost Method d. Any of the above

54. Which of the following statements concerning the requirement of IAS 27 for preparation of Separate Financial Statements is
incorrect?
a. IAS 27 as amended mandates the entities which shall present separate financial statements.
b. IAS 27 does not mandate or require which parent corporation should produce separate financial statements but it shall
depend on the laws or rules of a particular jurisdiction.
c. Separate financial statements need not be appended to, or accompany, the consolidated financial statements.
d. A parent entity that is exempted from preparing consolidated financial statements in accordance with IFRS 10 provision may
present financial statements as its only financial statements.
e. When the entity elects either cost method or fair value model, an entity shall recognize a dividend from a subsidiary, a joint
venture or an associate in profit or loss in its separate financial statements when its right to receive the dividend is
established but in case of equity method, it shall be considered as deduction from investment account.

55. When the parent corporation elects to account its investments in subsidiaries, associates or jointly controlled entities in its
separate financial statements using cost model or fair value model, how shall it recognize its dividends from a subsidiary, joint
venture or associate?
a. The dividends from a subsidiary, joint venture or associate shall be recognized as dividend income as part of profit or loss of
separate financial statement of comprehensive income when its right to receive dividend is established.
b. The dividends from a subsidiary, joint venture or associate shall be recognized as deduction from investment account when
its right to receive dividend is established.
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 c. The dividends from a subsidiary, joint venture or associate shall be recognized as dividend income as part of other
comprehensive income of separate statement of comprehensive income when its right to receive dividend is established.
d. The dividends from a subsidiary, joint venture or associate shall be eliminated through proportionate consolidation in the
separate statement of comprehensive income.

56. When the parent corporation elects to account its investments in subsidiaries, associates or jointly controlled entities in its
separate financial statements using equity method, how shall it recognize its dividends from a subsidiary, joint venture or
associate?
a. The dividends from a subsidiary, joint venture or associate shall be recognized as dividend income as part of profit or loss of
separate financial statement of comprehensive income when its right to receive dividend is established.
b. The dividends from a subsidiary, joint venture or associate shall be recognized as deduction from investment account when
its right to receive dividend is established.
c. The dividends from a subsidiary, joint venture or associate shall be recognized as dividend income as part of other
comprehensive income of separate statement of comprehensive income when its right to receive dividend is established.
d. The dividends from a subsidiary, joint venture or associate shall be eliminated through proportionate consolidation in the
separate statement of comprehensive income.

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