Papa Co. and Son Co. entered into a business combination wherein Papa Co.

acquired 75% interest in the

of which were settled on January 1, 2016, the date of acquisition by paying cash worth P1,000,000. The NC
share at the date of acquistion. At that date, all assets and liabilities of Son Co. are equal to their resp
following:

Book Values Fair Values Net Effect in FVNA

Inventories 100,000 110,000 10,000
Equipment-net 200,000 180,000 (20,000)
Machinery-net 150,000 175,000 25,000
Loans Payable 100,000 120,000 (20,000)

60% of the inventories were sold in 2016, 25% on 2017 and 15% on 2018. The equipment has a remaining
the other hand, is expected to be useful at the end of 5 years from the acquisiton date. The loans payable has
date of acquisition.

It was also ascertained that Papa Co.'s goodwill was impaired by P10,000 and P5,000 at the end of 2016 and
Co.'s goodwill was believed to be impaired by P20,000 and P10,000 at the end of 2016 and 2017, respectively

Other information with regard to the two companies are as follows:

Net Income Dividends Paid

Papa Co. 800,000 100,000
2016
Son Co. 200,000 50,000
Papa Co. 1,000,000 200,000
2017
Son Co. 300,000 100,000

As of December 31, 2016 As of December 31, 2017

Papa Co. Son Co. Papa Co.
Cash 500,000 800,000 1,075,000
Accounts Receivable 500,000 300,000 750,000
Inventories 150,000 120,000 205,000
Equipment-net 300,000 150,000 280,000
Machinery-net 250,000 120,000 225,000
Investment in Subsidiary 1,000,000 - 1,000,000
Goodwill 50,000 - 45,000
Total Assets 2,750,000 1,490,000 3,580,000

Accounts Payable 200,000 50,000 220,000

Loans Payable 50,000 100,000 60,000
Total Liabilities 250,000 150,000 280,000

Ordinary Share Capital, P100 par 1,000,000 500,000 1,000,000

Ordinary Share premium 500,000 200,000 500,000
Retained Earnings 1,000,000 640,000 1,800,000

Determine the following:

1. Goodwill/Gain on acquisition
2. 2016 Consolidated Net Income
3. Parent's Share in the 2016 Consolidated Net Income
4. Non-controlling Interest's Share in 2016 Consolidated Net Income
5. Consolidated Total Assets as of December 31, 2016
Determine the following:
1. Goodwill/Gain on acquisition
2. 2016 Consolidated Net Income
3. Parent's Share in the 2016 Consolidated Net Income
4. Non-controlling Interest's Share in 2016 Consolidated Net Income
5. Consolidated Total Assets as of December 31, 2016
6. Consolidated Total Liabilities as of December 31, 2016
7. Consolidated Retained Earnings as of December 31, 2016
8. Non-controlling Interest as of December 31, 2016
9. Consolidated Total Shareholders' Equity as of December 31, 2016
10. 2017 Consolidated Net Income
11. Consolidated Total Assets as of December 31, 2017
12. Consolidated Total Liabilities as of December 31, 2017
13. Consolidated Retained Earnings as of December 31, 2017
14. Non-controlling Interest as of December 31, 2017
15. Consolidated Total Shareholders' Equity as of December 31, 2017
 SOLUTIONS:
red 75% interest in the common stock of Son Co. All
orth P1,000,000. The NCI has a fair value of P320 per
. are equal to their respective fair values except the

ipment has a remaining life of 4 years. Machinery, on

. The loans payable has a maturity of 2 years from the

0 at the end of 2016 and 2017, respectively. While Son

16 and 2017, respectively.

December 31, 2017

Son Co.
950,000
460,000
110,000
100,000 Consolidated Retained Earnings, December 31, 2016
90,000
-
-
1,710,000

70,000
100,000
170,000

500,000
200,000
840,000
 Consolidated Retained Earnings, December 31, 2017

10

11
12

13

14

15
SOLUTIONS:

75% 25%
Fair Value of the Whole Subsidiary 1,000,000 400,000
FVNA-Subsidiary 888,750 296,250
Goodwill 111,250 103,750

Amortization Schedule
FV-BV 2016
Inventories 10,000 (6,000)
Equipment-net (20,000) 5,000
Machinery-net 25,000 (5,000)

BV-FV
Bonds Payable (20,000) 10,000
Total Amortization 4,000

2016
Subsidiary's Net Income 200,000
2016 amortization 4,000
204,000

Parent's Share 153,000

Goodwill Impairment Loss (10,349)
Share in Subsidiary's Net Income 142,651
Parent's Net Income 800,000
Dividend Income Received From Subsidiary (37,500)
Consolidated Net Income 905,151 +
Retained Earnings of Parent, January 1, 2016 300,000
Dividend Paid by Parent (100,000)
Consolidated Retained Earnings, December 31, 2016 1,105,151

2017
Subsidiary's Net Income 300,000
2017 amortization 7,500
307,500

Parent's Share 230,625

Goodwill Impairment Loss (5,174)
Share in Subsidiary's Net Income 225,451
Parent's Net Income 1,000,000
Dividend Income Received From Subsidiary (75,000)
Consolidated Net Income 1,150,451 +
Consolidated Retained Earnings, January 1, 2017 1,105,151
Dividend Paid by Parent (200,000)
Consolidated Retained Earnings, December 31, 2017 2,055,602

ANSWERS:
Goodwill 215,000.00

2016 Consolidated Net Income 946,500.00

Parent's Share in 2016 CNI 905,151.16

NCI's Share in 2016 CNI 41,348.84

Parent's Assets at 12/31/16 2,750,000

Investment in Subsidiary (1,000,000)
Subsidiary's Assets at 12/31/16 1,490,000
FV-BV adjustments 15,000
Accumulated Amortization-2016 (6,000)
Goodwill 215,000
Goodwill Impairment (20,000)
Consolidated Total Assets, 12/31/16 3,444,000

Parent's Liabilities at 12/31/16 250,000

Subsidiary's Liabilities at 12/31/16 150,000
FV-BV adjustments 20,000
Accumulated Amortization-2016 (10,000)
Consolidated Total Liabilities, 12/31/16 410,000

Consolidated Retained Earnings, 12/31/16 1,105,151

Non-controlling Interest, 12/31/16 428,849

Ordinary Share Capital-Parent 1,000,000

Ordinary Share Premium-Parent 500,000
Consolidated Retained Earnings, 12/31/16 1,105,151
Non-controlling Interest, 12/31/16 428,849
Consolidated Shareholders' Equity, 12/31/16 3,034,000

2017 Consolidated Net Income 1,222,500

Parent's Assets at 12/31/17 3,580,000

Investment in Subsidiary (1,000,000)
Subsidiary's Assets at 12/31/17 1,710,000
FV-BV adjustments 15,000
Accumulated Amortization-2017 (8,500)
Goodwill 215,000
Accumulated Goodwill Impairment Loss-2017 (30,000)
Consolidated Total Assets, 12/31/17 4,481,500

Parent's Liabilities at 12/31/17 280,000

Subsidiary's Liabilities at 12/31/17 170,000
FV-BV adjustments 20,000
Accumulated Amortization-2017 (20,000)
Consolidated Total Liabilities, 12/31/17 450,000

Consolidated Retained Earnings, 12/31/17 2,055,602

Non-controlling Interest, 12/31/17 475,898

Ordinary Share Capital-Parent 1,000,000

Ordinary Share Premium-Parent 500,000
Consolidated Retained Earnings, 12/31/17 2,055,602
Non-controlling Interest, 12/31/17 475,898
Consolidated Shareholders' Equity, 12/31/17 4,031,500
Total
1,400,000
1,185,000
215,000

2017
(2,500)
5,000
(5,000)

10,000
7,500

51,000 NCI's Share

(9,651)
41,349

41,349 = 946,500 Total CNI

400,000 NCI, January 1, 2016
(12,500) Dividend Received from Subsidiary
428,849 NCI, December 31, 2016

76,875 NCI's Share

(4,826)
72,049

72,049 = 1,222,500 Total CNI

428,849 NCI, January 1, 2017
(25,000) Dividend Received from Subsidiary
475,898 NCI, December 31, 2017