Please refer to the video discussion for the solution.
Consolidation at acquisition date
On January 1, 20x1, Health Co. acquired 70% interest in Wealth Co. The financial statements of the
combining entities right after business combination are as follows:
Health Co. Wealth Co.
Cash 100,000.00 20,000.00
Accounts Receivable 120,000.00 40,000.00
Inventory 400,000.00 100,000.00
Investment in subsidiary 560,000.00 -
Prepaid assets 30,000.00 10,000.00
Building, net 1,200,000.00 400,000.00
Total Assets 2,410,000.00 570,000.00
Accounts payable 70,000.00 90,000.00
Share capital 1,000,000.00 200,000.00
Share premium 350,000.00 50,000.00
Retained earnings 990,000.00 230,000.00
Total liabilities and
equity 2,410,000.00 570,000.00
The carrying amounts of Wealth’s assets and liabilities approximate the acquisition-date fair values,
except as follows:
Carrying amount Fair value
Accounts receivable 40,000.00 20,000.00
Building, net 400,000.00 540,000.00
Requirement: Prepare the consolidated statement of financial position.
Consolidation subsequent to acquisition date – NCI at proportionate share
Pink co. acquired 90% interest in Floyd, Inc. on January 1, 20x1
Information on Jan. 1, 20x1
Floyd’s net identifiable assets have a carrying amount of P480,000 and fair value of P600,000.
The difference is due to the following:
Carrying amount Fair value
Inventory 100,000.00 110,000.00
Building, net 400,000.00 510,000.00
The remaining useful life of the building is 5 years
Pink measured the NCI at proportionate share
Information on Dec. 31, 20x1:
Statement of financial position
As at December 31, 20x1
Pink Co. Floyd Co.
Cash 620,000.00 120,000.00
Accounts receivable 170,000.00 100,000.00
Inventory 200,000.00 80,000.00
Investment in subsidiary 560,000.00 -
Prepaid assets 10,000.00 8,000.00
Building, net 1,100,000.00 350,000.00
Total assets 2,660,000.00 658,000.00
Accounts payable 50,000.00 90,000.00
Share capital 1,000,000.00 200,000.00
Share premium
350,000.00 50,000.00
Retained earnings 1,260,000.00 318,000.00
Total liabilities and
equity 2,660,000.00 658,000.00
Statement of profit or loss
For the year ended December 31, 20x1
Pink Co. Floyd Co.
Sales 600,000.00 200,000.00
- -
Cost of goods sold 200,000.00 60,000.00
Gross profit 400,000.00 140,000.00
- -
Depreciation expense 100,000.00 50,000.00
- -
Distribution Cost 30,000.00 2,000.00
Profit for the year 270,000.00 88,000.00
There were no dividends declared, no intercompany transactions and no impairment of goodwill
in 20x1.
Requirement: Prepare the December 31, 20x1 consolidated financial statements
Consolidation subsequent to acquisition date – NCI at fair value
Use the information in the preceding problem except that Pink measured NCI at a fair value of P65,000
Requirement: Prepare the December 31, 20x1 consolidated financial statements
