QUIZ 03A Consolidation

San Beda College Alabang Accountancy Department Advanced Financial Accounting and Reporting 2  NAME: _______________CORPU__ _______________CORPU_______________ ________________________ ___________ !r " #ec: _________________________  _________________________  $U% & ' Con(olidation SET A Multiple Choice  Identify the choice that best completes the statement or answers answers the question. question. )* According According to to PFR# )+, -.ic. -.ic. o/ t.e /ollo /ollo-ing -ing (tate (tatement( ment( i( i( true0 a* A parent parent entity entity i( re1uired re1uired to con(olidate con(olidate it( it( (u(idiari (u(idiarie( e( only /or internal internal reportin reporting g purpo(e(* purpo(e(*  * A parent entity i( i( encouraged ut not re1uired to con(olidate con(olidate it( (u(idiarie(* c* A paren parentt entity entity i( re1uir re1uired ed to con(ol con(olidate idate it( (u(id (u(idiari iarie(* e(* d* A parent parent need not not con(olidate con(olidate it( it( (u(idiarie (u(idiarie(( i/ t.e u(ine((e( u(ine((e( o/ t.e (u(idi (u(idiarie( arie( are are di//erent di//erent and not related to t.e u(ine(( o/ t.e parent* 2* According According to to PFR# )+, )+, -.ic. o/ t.e t.e /ollo-ing /ollo-ing i( i( not an element element o/ control0 control0 a* ail ailit ity y to to a// a//ec ectt ret retur urn* n* c* ma3 a3or or .o .old ldiing ng((  * po-er d* e4po(ure, or rig.t(, rig.t(, to variale variale return( &* Non'controlling intere(t( (.all e pre(ented in t.e con(olidated (tatement o/ /inancial /inancial po(ition po(ition a* -it. -it.in in e1uity e1uity,, (eparatel (eparately y /rom t.e t.e e1uity e1uity o/ t.e o-ner o-ner(( o/ t.e parent parent**  * -it.in e1uity, e1uity, not not di(tingui(.ed di(tingui(.ed /rom t.e e1uity e1uity o/ t.e o-ner( o-ner( o/ t.e parent c* a( a me55anine me55anine item et-een et-een liailit liailitie( ie( and e1uity e1uity d* any o/ o/ t.e(e t.e(e a( a matter matter o/ account accounting ing polic policy y c.oice c.oice 6* 7i-i, 7i-i, %nc* ac1uired ac1uired Mori Co* on Decemer Decemer &), 2+4+ in a u(ine(( u(ine(( cominati comination* on* 8ot. 7i-i 7i-i and Mori -ere incorporat incorporated ed and  egan u(ine(( on 9anuary ), )* 8ot. 7i-i and Mori reported net income /or ) and 2+4+* Con(olidated retained earning( /or 7i-i, %nc and #u(idiary a( o/ Decemer &), 2+4+ -ill include t.e net income o/ Mori Co*, /rom -.at date0 a* %t -ill -ill not incl include ude t.e t.e net net incom incomee o/ Mori Mori Co*  * 9anuary ), 2+4+ to Decemer &), 2+4+ 2+4+ only c* 9anuary ), ), 2+ 2+4+ d* 9anu 9anuaary ), ) ) ;* RUE or FAI#E, according to %A# 2@ con(olidated an #eparate Financial #tatement(* #tatement %: Con(olidated /inancial (tatement( mu(t e prepared u(ing uni/orm accounting policie(, #tatement %%: >.e non'controlling intere(t in t.e net a((et( o/ (u(idiarie( may e (.o-n y -ay o/ note to t.e con(olidated (tatement o/ /inancial po(ition #tatement % #tatement %% a* Fal(e Fal(e c* >rue >rue  * Fal(e >rue d* >rue Fal(e )@* .e remaining u(e/ul li/e o/ t.e e1uipment i( 6 year(* Non'controlling intere(t -a( mea(ured u(ing t.e proportionate (.are met.od* >.e (tatement( o/ /inancial po(ition o/ t.e entitie( on Decemer &), 2+4) are a( /ollo-(: #1uare Co* Circle Co*  ASSETS  Ca(.**********************************************************************************************&2,+++*************** &)?,+++ %nventory**************************************************************************************62+,+++*****************?+,+++ %nve(tment in (u(idiary Jat co(tK************************************************&++,+++ E1uipment, net ***************************************************************************** ;?+,+++ ***************)2+,+++ >O>AI A##E>#***********************************************************************),@2,+++ ***************6?,++  LIABILITIES AND E!IT" >rade and ot.er payale( ************************************************************** 22,+++***************)2+,+++

#.are capital*********************************************************************************6+,+++***************2++,+++ Retained earning( *************************************************************************  66+,+++***************)@?,+++ >otal e1uity********************************************************************************  ),&+,+++***************&@?,+++ >O>AI I%A8%I%>%E# AND E$U%>!************************************* ),?@2,+++ ***************6?,+++  No dividend( -ere declared y eit.er entity during 2+4)* >.ere -ere al(o no inter'company tran(action( and impairment in good-ill* 22* o- muc. i( t.e con(olidated retained earning( on Decemer &), 2+4)0 a* &2,+++ c* 6@2,+++  * &@,+++ d* ;22,+++ 2&* o- muc. i( t.e con(olidated total e1uity a( o/ Decemer &), 2+4)0 a* ),6)2,+++ c* ),62,+++  * ),6);,+++ d* ),&+,+++ U(e t.e /ollo-ing in/ormation /or t.e ne4t 1ue(tion(: At t.e eginning o/ t.e year, Fa(t Co* ac1uired @+ intere(t in #lo- Co* On ac1ui(ition date, Circle=( identi/iale a((et( appro4imated t.eir /air value( e4cept /or an inventory -.o(e /air value e4ceeded it( carrying amount y P)+,+++ and a  uilding -.o(e /air value e4ceeded it( carrying amount y P+,+++* >.e uilding .a( a remaining u(e/ul li/e o/ ; year(* At t.e end o/ t.e year, Fa(t Co* and #lo- Co* reported pro/it( o/ P6++,+++ and P+,+++, re(pectively*  No dividend( -ere declared y eit.er entity during year* >.ere -ere al(o no inter'company tran(action( and impairment in good-ill* 26* o- muc. i( t.e con(olidated pro/it in 2+4)0 a* 66,+++  * &,+++

c* d*

6;6,+++ 6?,+++

2;* o- muc. i( t.e con(olidated pro/it attriutale to o-ner( o/ t.e parent in 2+4)0 a* 6&@,++ c* &),++  * &?,++ d* 66,++ 2?* 8aiter %nc* ac1uired 9er(ey Company on 9anuary ),2+))* .e uilding .a( a )+'year remaining u(e/ul li/e and t.e e1uipment .a( a ;'year remaining u(e/ul li/e* >.e /air value( o/ t.e a((et( on t.at date -ere: Iand*******************************************************************************************P)++,+++ 8uilding****************************************************************************************)&+,+++ E1uipment**************************************************************************************@;,+++ .e Iampara Company ac1uired a @+ intere(t in >.e OaG Company /or P),?+,+++ -.en t.e /air value o/ OaG( identi/iale a((et( and liailitie( -a( P@++,+++ and elected to mea(ure t.e non'controlling intere(t at it( (.are o/ t.e identi/iale net a((et(* Annual impairment revie-( o/ good-ill .ave not re(ulted in any impairment lo((e( eing recogni5ed* OaG( current (tatement o/ /inancial po(ition (.o-( (.are capital o/ P)++,+++, a revaluation re(erve o/ P&++,+++ and retained earning( o/ P),6++,+++* Under PFR# & 8u(ine(( comination(, -.at /igure in re(pect o/ good-ill (.ould no- e carried in Iampara( con(olidated (tatement o/ /inancial po(ition0 a* P)?+,+++ c* P),2?+,+++  * P@++,+++ d* P),6@+,+++

2* Pluro Company purc.a(e( ,+++ (.are( o/ #un Company /or P?6 per (.are* 8e/ore ac1ui(ition, #un Company .a( t.e /ollo-ing alance (.eet:  Assets  Liabilities and Equity

Ca(. and ca(. e1uivalent(************P2+,+++ Current liailitie(*************************P2;+,+++ %nventory**************************************2+,+++ Common (tocG, P; par********************;+,+++ Property and e1uipment*************** 6++,+++ AP%C**********************************************)&+,+++ Hood-ill *************************************** )++,+++ Retained earning( ************************** &@+,+++ >otal a((et(**********************************P++,+++ >otal liailitie( and e1uity *********** P++,+++ On t.e date o/ ac1ui(ition, Pluto elieve( t.at t.e inventory .a( a /air value o/ P6++,+++ and t.at t.e property and e1uipment i( -ort. P;++,+++* On t.e date o/ ac1ui(ition, -.at i( t.e good-ill Jgain on ac1ui(itionK to e reported on t.e con(olidated (tatement(0 a* PJ26,+++K c* P &+,+++  * P 26,+++ d* PJ&+,+++K 2* On 9anuary ), 2+)), Ritt Corp* purc.a(ed + o/ #.a- Corp*( P)+ par common (tocG /or P@;,+++* On t.i( date, t.e carrying amount o/ #.a-( net a((et( -a( P),+++,+++* >.e /air value( o/ #.a-( identi/iale a((et( and liailitie( -ere t.e (ame a( t.eir carrying amount( e4cept /or plant a((et( JnetK -it. /air value( o/ P)++,+++ in e4ce(( o/ t.eir carrying amount* >.e /air value o/ t.e non'controlling intere(t in #.a- on 9anuary ), 2+)), -a( P2;+,+++* For t.e year ended Decemer &), 2+)), #.a- .ad net income o/ P)+,+++ and paid ca(. dividend( totaling P)2;,+++* %n t.e Decemer &), 2+)) con(olidated (tatement o/ /inancial po(ition, non'controlling intere(t (.ould e reported at a* P2&&*+++ c* P2)&,+++  * P2?&,+++ d* P2++,+++ &+* 8acolod Company ac1uired ;; o/ t.e out(tanding common (tocG o/ #ilay Company on Augu(t ), 2+)2 at a total co(t o/  P;,++;,+++**At ac1ui(ition date, #ilay( common (tocG and retained earning( amounted to P2++,+++ and P6,++,+++, re(pectively All o/ #ilay( a((et( and liailitie( .ad /air value( e1ual to ooG value( a( o/ t.e ac1ui(ition date e4cept /or patent( -.ic. .ad a /air value o/ P),++,+++*and a ooG value o/ P6++,+++ >.e patent( .ave a remaining li/e o/ /ive year(* For 2+)2, #ilay .ad t.e /ollo-ing earning( and dividend(*  #an $ #ul   Au% $ Dec  Net income****************************************************P;++,+++**********P),)++,+++ Dividend( paid**********************************************P&++,+++**********P),2++,+++ Compute t.e net income attriutale to t.e non'controlling intere(t0 a* P;6,+++ c* P&?,+++  * P??@,;++ d* P662,;++