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    Jun Zen Ralph Yap BSA - 3 Year Let's Check

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    Junzen Ralph Yap
    1. P Company owns 80% of S Company. 2. Eliminating entries are made to remove intercompany transactions from the consolidated trial balance such as the sale of inventory from S to P. 3. Consolidated net income is calculated by combining the net incomes of P and S Companies after adjusting for unrealized intercompany profits. 4. The non-controlling interest balance on the consolidated statement of financial position is computed by updating the beginning balance for the non-controlling shareholders' share of income and dividends.

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    Jun Zen Ralph Yap BSA - 3 Year Let's Check

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    Junzen Ralph Yap
    109 views2 pages
    1. P Company owns 80% of S Company. 2. Eliminating entries are made to remove intercompany transactions from the consolidated trial balance such as the sale of inventory from S to P. 3. Consolidated net income is calculated by combining the net incomes of P and S Companies after adjusting for unrealized intercompany profits. 4. The non-controlling interest balance on the consolidated statement of financial position is computed by updating the beginning balance for the non-controlling shareholders' share of income and dividends.

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    Yap_ACP312_ULOa_Let's Check1

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    1. P Company owns 80% of S Company. 2. Eliminating entries are made to remove intercompany transactions from the consolidated trial balance such as the sale of inventory from S to P. 3. Consolidated net income is calculated by combining the net incomes of P and S Companies after adjusting for unrealized intercompany profits. 4. The non-controlling interest balance on the consolidated statement of financial position is computed by updating the beginning balance for the non-controlling shareholders' share of income and dividends.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    109 views2 pages

    Jun Zen Ralph Yap BSA - 3 Year Let's Check

    Uploaded by

    Junzen Ralph Yap
    1. P Company owns 80% of S Company. 2. Eliminating entries are made to remove intercompany transactions from the consolidated trial balance such as the sale of inventory from S to P. 3. Consolidated net income is calculated by combining the net incomes of P and S Companies after adjusting for unrealized intercompany profits. 4. The non-controlling interest balance on the consolidated statement of financial position is computed by updating the beginning balance for the non-controlling shareholders' share of income and dividends.

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    Jun Zen Ralph Yap BSA – 3rd Year

    Let’s Check

    Activity 1. P Company owns 80 percent of the stock of S Company, which was acquired at underlying
    book value on August 30, 2019. Summarized trial balance data for the companies as of December 31,
    2019 are as follows:

    On January 1, 2020, the inventory held by P Company contained merchandise purchased for P60,000
    from S Company. S Company purchased the merchandise for P40,000. In 2020, S Company spent
    P100,000 to purchase additional merchandise which it sold to P Company for P 150,000. By December
    31, 2020 P Company sold all the merchandise that had been on hand on January 1, 2020, but continued
    to hold in inventory P45,000 of the 2020 purchase from S Company.

    Required:

    a) Prepare all eliminating entries needed to complete a consolidation working paper for 2020.

    1 Dividend Income 32,000


    Non-Controlling Interest 8,000
    Dividends declared - S Co. 40,000
    To eliminate intercompany dividends

    2 Common Stock - S Co. 90,000


    Retained Earnings - S Co. 220,000
    Investment in S Company 248,000
    Non-Controlling Interest 62,000
    To eliminate equity accounts against subsidiary account and recognize NCI

    3 Non-Controlling Interest 4,000


    Retained Earnings, beg. - P Co. 16,000
    Cost of Goods
    Sold 20,000
    To eliminate realized profit in beginning inventory

    4 Sales 150,000
    Cost of Goods
    Sold 135,000
    Inventory, Dec.
    31 15,000
    To eliminate intercompany sales and unrealized profit in ending inventory

    5 NCI in net income of subsidiary 9,000


    Non-Controlling Interest 9,000
    To establish minority interest in net income of S Company

    Solution:
    Sales ₱ 200,000
    Less: Cost and Expenses (140000+20000) ₱ 160,000
    Net Income ₱ 40,000
    Realized profit in beginning inventory - Upstream ₱ 20,000
    Less: Unrealized profit in ending inventory - Upstream ₱ 15,000
    Adjusted net income ₱ 45,000
    Multiply: NCI proportionate share ₱ 0.20
    NCI in net income of subsidiary ₱ 9,000

    b) Compute consolidated CI for 2020.

    P Company net income (250000 - 32000) ₱ 218,000


    S Company adjusted net income ₱ 45,000
    Consolidated Net Income ₱ 263,000

    c) Compute the balance assigned to the non-controlling interest in the consolidated statement of
    financial position as of December 31, 2020.

    NCI, Aug. 30, 2019 (310000 x 20%) ₱ 62,000


    Less:NCI in subsidiary dividends (40000 x 20%) ₱ 8,000
    NCI in net income of subsidiary ₱ 9,000
    NCI, end ₱ 63,000

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