BC and CL

LA CONSOLACION COLLEGE TANAUAN Accountancy Department ACCOUNTING REVIEW BUSINESS COMBINATION AND CORPORATE LIQUIDATION NAME: _________________________ SECTION: ______________________

DATE: ________________ SCORE: ______________

Direction:

Read and solve the following problems. Write the letter of your best answer on the space provided before each number. Erasures are not allowed and considered wrong.

___1. Red Corporation will issue common shares with a par value P10 for the net assets of Blue Company. Red’s common stock has a current market value of P40 per share. Blue’s Statement of Financial Position on the date of acquisition follow: Current Assets P320,000 Common Stock, P5 par P 80,000 Property and equipment 880,000 Additional paid in capital 320,000 Liabilities 400,000 Retained earnings 400,000 Blue’s current assets are appraised at P400,000 and the property and equipment was also appraised at P1,600,000. Its liabilities are fairly valued. Accordingly, Red Corporation issue shares of its common stock with a total market value equal to that of Blue’s net assets including goodwill. In order to recognize goodwill of P200,000, how many shares were to be issued by Red? a. 45,000 c. 50,000 b. 40,000 d. 55,000 ___2. Rock Corporation was merged into Horse Company in a combination properly accounted for as an acquisition. Their condensed Statement of Financial Position before the combination are: Rook Horse Current Assets P3,288,000 P1,627,600 Property and equipment, net 4,654,000 1,040,000 Patents 260,000 Total Assets P7,942,000 P2,927,600 Liabilities P3,704,000 P 171,600 Capital stock, P100 par 2,600,000 1,300,000 Additional paid in capital 390,000 350,000 Retained earnings 1,248,000 1,106,000 Total liabilities and equity P7,942,000 P2,927,600 Per appraisal’s report, Horse assets have fair values of: Current Assets P1,653,600 Property and equipment 1,248,000 Patents 338,000 Rook corporation purchases the net assets of Horse for P3,168,000 cash. What is the total assets of Rook Corporation after the combination? a. P7,354,000 c. P8,113,600 b. P7,254,000 d. P9,181,600 ___3. Pete Corporation and Sol Company agreed to combine their businesses, with Pete Corporation as the th e surviving sur viving entity. Pete will issue 48,000 shares of its capital stock, with a par value of P100 per share, and a fair market value of P175 per share. Pete incurred the following additional acquisition-related costs: Professional Fees – P120,000; Broker’s fees – – P80,000; and Costs to register and issue stock – – P50,000. Before combination, their respective statement of financial position showed stockholder’s equity accounts as follow s: Pete Sol Capital stock P7,200,000 P3,600,000 Additional paid in capital 3,120,000 360,000 Retained earnings 6,000,000 2,040,000 What is the total stockholder’s equity of Pete Corporation after the combination? a. P24,720,000 c. P24,670,000 b. P24,470,000 d. P24,890,000

CPA Board Examination Operation – Advance Advance Accounting

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___4. Papa Corporation issued 120,000 shares of P10 par common stock with a fair value of P2,550,000 for all the outstanding stock of Mama Company. In addition, Papa incurred the following costs: Professional fees to arrange the business combination P27,000 Cost of SEC registration 12,000 Cost of printing and issuing stock certificates 3,000 Immediately before the business combination in which Mama company was dissolved, Mama’s asse ts and equities were as follows: Book value Fair value Current assets P1,000,000 P1,100,000 Plant assets 1,500,000 2,200,000 Liabilities 300,000 300,000 Common stock 2,000,000 Retained earnings 200,000 What is the amount of goodwill (gain on acquisition)? a. P408,000 c. (P450,000) b. (P550,000) d. P520,000 ___5. Using the same data in number 4, how much additional paid in capital is recorded by Papa? a. P1,350,000 c. P1,365,000 b. P1,335,000 d. P1,330,000 ___6. Using the same data in number 4, what is the amount of expense to be rec ognized by Papa? a. P32,000 c. P15,000 b. P27,000 d. P12,000 ___7. Using the same data in number 4, what is the net increase(decrease) in the retained earnings of Papa? a. P450,000 c. P423,000 b. P408,000 d. P410,000 ___8. On May 1,2009, the separate Statement of Financial Position of Pablo Corporation and Simon Company are as follows: Pablo Simon Cash P145,700 P 15,500 Accounts receivable 120,500 35,800 Inventories 42,500 10,200 Plant assets P185,800 78,000 Total assets P494,500 P139,500 Liabilities P110,400 P 28,800 Capital stock, P100 par value 200,000 50,000 Additional paid in capital 50,000 Retained earnings 134,100 60,700 Total liabilities and stockholder’s equity P494,500 P139,500 On May 1,2009 Pablo acquired 100% of Simon’s outstanding capital stock for P100,000. Pablo incurred additional P32,700 acquisition-related costs. All the assets of Simon are fairly valued except the plant assets with a fair value of P90,000 on May 1,2009. In the consolidated balance on May 1,2009, what amount of total assets will be reported? a. P646,000 c. P513,300 b. P490,800 d. P634,000 ___9. Using the same data in number 8, what amount of stockholder’s equity will be reported in the consolidated statement of financial position on May 1,2009? a. P384,100 c. P351,400 b. P494,800 d. P472,600 ___10. On January 1,2009, Pure Company acquired 80% interest in Sure Company for P2,000,000 cash. The stockholder’s equity of Sure at the time of acquisition is P1,875,000. On January 1,2008, NCI is measured at its implied fair value. The excess of cost over the book value of interest acquired is allocated to the following assets: Inventories – P100,000 (sold in 2009) and Building – P200,000 (5-year remaining life). During 2009, Sure Company reported net income of P500,000 and paid dividends of P100,000.

CPA Board Examination Operation – Advance Accounting

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What is the fair value of NCI on January 1,2009? a. P500,000 b. P375,000

c. P525,000 d. P400,000

___11. Using the same data in number 10, how much goodwill (gain on acquisition) is reported in the consolidated statement of financial position on 1/1/2008? a. P325,000 c. P(200,000) b. P200,000 d. P(375,000) ___12. Using the same data in number 10, what is the consolidated net income attributable to parent on December 31,2009, if Pure’s net income for 2009 is P600,000) a. P860,000 c. P808,000 b. P888,000 d. P948,000 ___13. Using the same data in number 10, what is the Noncontrolling Interest in Net Assets of subsidiary on December 31,2009? a. P455,000 c. P495,000 b. P552,000 d. P475,900 ___14. On January 1,2009, Phil. Inc. issued 400,000 additional shares of P10 par value common stock for all of Sony Company’s common stock. Immediately before this business combination, Phil’s stockholder’s equity was P16,000,000 and Sony’s stockholder’s equity was P8,000,000. On January 1,2009. The fair market value of Phil’s stock was P20 per share, and the fair value of Sony’s net assets was P8,000,000. Data from separate company’s 2009 operations follows: Phil Sony Net Income P2,500,000 P600,000 Dividends paid 900,000 What is the consolidated stockholder’s equity at December 31,2009? a. P19,320,000 c. P26,200,000 b. P17,600,000 d. P18,200,000 ___15. On January 1,2009, Padre Company purchased an 80% investment in Saint Company. The price paid was equal to Padre’s interest in Saint’s net assets at that date. On January 1,2009, Padre and Saint had retained earnings of P1,000,000 and P200,000 respectively. During 2009: Consolidated net income is P400,000 including NCI net income. Padre declared dividends of P100,000. Saint had net income of P80,000 and declared dividends of P40,000. There were no other intercompany transactions. On December 31,2009, what is the consolidated retained earnings? a. P1,300,000 c. P1,532,000 b. P1,284,000 d. P1,540,000    

___16. Pete Company acquired a 70% interest in Steve Company in 2007. During 2008, Steve sold merchandise to pete for P10,000 at a gross profit of P2,000. The merchandise was resold during 2009 by Pete to outsiders for P15,000. The following are the net income of Steve Company for the years ended December 31,2008 and 2009: December 31,2008 --- P80,000 December 31,2009 --- P90,000 What is the NCI in Steve Net Income for 2008 and 2009, respectively? a. P24,000 and P27,000 c. P23,400 and P28,200 b. P23,400 and P26,400 d. P24,600 and P27,600 ___17. Selected data for two subsidiaries of Fafa Corp. taen from December 31,2009, pre-closing trial balances are as follows: S1 Co. Debit S2 Co. Credit Shipments to S1 PP150,000 Shipments from S2 200,000 Intercompany inventory profit on total shipments 50,000 Additional data relating to t he December 31,2009 inventory are as follows Inventory acquired from outside parties P175,000 P250,000 Inventory acquired from S2 60,000 At December 31,2009, the inventory reported on the combined statement of financial position of the two subsidiaries should be: a. P425,000 c. P470,000


Page 3 of 11

b. P435,000

d. P485,000

___18. PC Corporation purchased 80% interest in SD Company for P600,000 on January 1,2008, at which time SD’s stockholder’s equity amounts to P700,000. The excess cost over book value was assigned to goodwill which is not amortized. Income statements of the two companies for 2009 are as follows: PC SD Sales P1,000,000 P500,000 Income from subsidiary – SD 112,000 Cost of sales (400,000) (250,000) Operating expenses (220,000) (100,000) Net income P 492,000 P150,000 During 2008, SD sold inventory items to PC for P80,000. This merchandise c ost SD P50,000 and ¼ of it remained in PC’s December 31,2009 inventory. During 2009, SD’s sales to PC amounted to P90,000. This merchandise cost SD P63,000 and ½ of it remained in PC’s December 31,2009 inventory. What is the consolidated net income attributable to parent on December 31,2009? a. P492,600 c. P495,200 b. P492,000 d. P490,000 ___19. On January 2,2009, PG Corporation sold equipment costing P100,000 with accumulated depreciation of P25,000 to its wholly-owned subsidiary, SM Inc. The selling price was P90,000. PG was depreciating the equipment on the straight-line method over 20 years with no salvage value. SM Continued this depreciation. What are the cost and accumulated depreciation, respectively, of this equipment in the December 31,2009 Consolidated Statement of Financial Position? a. P75,000 and P3,750 c. P90,000 and P29,500 b. P90,000 and P4,500 d. P100,000 and P30,000 ___20. On January 1,2007, SST Company purchased a computer with an expected life of 5 years. On January 1,2009, SST Company sold the computer to PMN Corporation and recorded the following entry: Cash 39,000 Accumulated depreciation 16,000 Computer equipment 40,000 Gain on sale of equipment 15,000 PMN Corporation holds 60% of the voting shares of SST Company. SST Company and PMN Corporation reported income from its own operations of P45,000 and P85,000 for 2009 respectively. There is no change in the estimated life of the equipment as a result of the intercompany sale. What is the consolidated net income attributable to parent for 2009? a. P103,000 c. P112,000 b. P106,000 d. P130,000 ___21. SS Corporation is 80% owned by PP Inc. On January 1,2003, SS Corporation paid 100,000 for a truck with an expected economic life of 10 years and no residual values. SS Corp. sold the truck to PP Inc. on January 1,2009. During the preparation of the consolidated working paper for 2009, the following working paper entry was made to eliminate the effects of the intercompany truck sale: Truck 48,000 Gain on sale of truck 12,000 Depreciation expense 3,000 Accumulated depreciation 57,000 What amount of depreciation expense was recorded by PP Inc. during 2009? a. P10,000 c. P50,000 b. P13,000 d. P5,200 ___22. The accountant of Holy Compan y under liquidation provided the following data: Assets at book value P100,000 Assets at net realizable value 75,000 Liabilities at book value: Fully secured mortgage payable 40,000 Unsecured accounts and notes payable 45,000 Unrecorded liabilities: Interest on bank notes 250


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Administrative expenses 4,000 A trustee is appointed to liquidate the company. The entry made by the trustee to record the assets and liabilities should include estate equity of: a. P14,250 c. P10,250 b. P14,000 d. P10,520 ___23. Using the same data in number 22, what is the estimated deficienc y to unsecured creditors? a. P35,000 c. P14,250 b. P31,000 d. P10,000 ___24. A review of the assets and l iabilities of Car Company in bankcruptcy on June 30 discloses the following: A mortgage payable of P350,000 is secured by land and building valued at P560,000. Notes payable of P175,000 are secured by equipment valued at P140,000. Assets other than those referred to have an estimated value of P157,500. Liabilities other than those referred to, total P420,000, which included claims with priority of P52,500. What is the estimated deficiency to unsecured creditors? a. P414,000 c. P87,500 b. P402,000 d. P35,000    

___25. Luna Company has had severe f inancial difficulties and is considering the possibility of liquidation. At this time, the company has the following assets (stated at net realizable value) and liabilities: Assets (pledged against liabilities of P70,000) P116,000 Assets (pledged against liabilities of P130,000) 50,000 Other assets 80,000 Liabilities with priority 42,000 Unsecured creditors 200,000 In liquidation, how much would be paid to the partially secured creditors? a. P130,000 c. P74,000 b. P50,000 d. P200,000 ___26. Manila Company filed a voluntary bankruptcy petition on June 1,2008 and the Statement of Affairs reflects the following amounts: Book Value Estimated Realizable Value Assets:

Assets pledged with fully secured creditors Assets pledged with partially secured creditors Free assets

P160,000 90,000 200,000

P190,000 60,000 140,000

Liabilities:

Liabilities with priority P 20,000 Fully secured creditors 130,000 Partially secured creditors 100,000 Unsecured creditors 260,000 Assume that the assets are converted into cash at the estimated realizable values and the business is liquidated. How much is the estimated amount to be paid to partially secured creditors? a. P60,000 c. P100,000 b. P90,000 d. P84,000 ___27. The following data were taken f rom the statement of aff airs of Malakas Company: Book Value Fair Value Assets:

Cash Accounts receivable Inventories Land Building (net) Equipment (net)

Book Value

Liabilities:

P 6,000 60,000 90,000 100,000 220,000 250,000

P 6,000 60,000 65,000 80,000 160,000 100,000

Accounts payable P 95,000 Wages payable (all have priorit y) 9,500 Taxes payable 14,000 Notes payable (secured by AR and Inventories) 190,000 Interest on notes payable 5,000 Bonds payable (secured by land and buildings) 220,000 Interest on bonds payable 11,000

What is the estimated deficiency to unsecured creditors? a. P73,500 b. P73,000


c. P68,500 d. P68,000

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___28. Using the same data in number 27, what is the amount to be paid to partially secured creditors? a. P163,150 c. P161,043 b. P163,815 d. P161,000 ___29. The PAL Company has decided to seek liquidation after previous restructuring and quasi-reorganization attem pts failed. The company has the following condensed statement of financial position as of May 1,2011: ASSETS LIABILITIES & STOCKHOLDER’S EQUITY Cash P 12,000 Accrued payroll P 40,000 Receivables (net) 280,000 Loans from officer 50,000 Inventory 70,000 Accounts payable 60,000 Prepaid expenses 1,000 Equipment loan payable 360,000 Plant assets 300,000 Business loan payable 180,000 Goodwill 39,000 Common stock 60,000 Deficit (48,000) Total P 702,000 Total P 702,000 The equipment loan payable is secured by specific plant assets having a book value of P300,000 and a realizable value of P350,000. Of the accounts payable, P40,000 is secured by inventory which has a cost of P40,000 and a liquidation value of P44,000. The balance of the inventory has a realizable value of P32,000. Receivables with a book value and market value of P100,000 and P80,000 respectively have been pledged as collateral on the business loan payable. The balance of the receivables have a realizable value of P150,000. Assuming trustee expenses of P12,000 in addition to recorded liabilities, which of the remaining unsecured creditors has the next highest order of priority? a. Accrued payroll c. Loan from officer b. Equipment loan payable d. Business loan payable ___30. Using the same data in number 29, the realizable value of assets pledged with fully secured creditors is: a. P459,000 c. P40,000 b. P44,000 d. P489,000 ___31. Using the same data in number 29, of those creditors who are partiall y secured, their unsecured amounts are: a. P430,000 c. P540,000 b. P110,000 d. P120,000 ___32. Using the same data in number 29, the total realizable value of free assets to unsecured creditors before unsecured creditors with priority is: a. P628,000 c. P220,000 b. P232,000 d. P198,000 ___33. Using the same data in number 29, the dividend to unsecured creditors or the expected recovery percentage of unsecured creditors (rounded) is: a. 90% c. P88% b. 100% d. 76% ___34. Using the same data in number 29, estimated deficiency to unsecured cr editors is: a. P -0c. P2,000 b. P22,000 d. P12,000 ___35. Using the same data in number 29, estimated loss on asset disposition is: a. P51,000 c. P61,000 b. P89,000 d. P90,000 ___36. Using the same data in number 29, estimated gain on asset disposition is: a. P56,000 c. P52,000 b. P54,000 d. P6,000 ___37. Using the same data in number 29, estimated amount paid to unsecured cr editors with priority is: a. P10,000 c. P40,000 b. P30,000 d. P110,000 ___38. Using the same data in number 29, estimated amount paid to full y secured creditors is: a. P40,000 c. P470,000 b. P390,000 d. P430,000


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___39. Using the same data in number 29, estimated amount paid to unsecured creditors without priorit y is: a. P70,000 c. P20,000 b. P61,600 d. P50,000 ___40. Using the same data in number 29, estimated payment to partiall y secured creditors is a. P358,800 c. P168,000 b. P526,800 d. P430,000 ___41. Using the same data in number 29, estimated payment to creditors is (round off) a. P580,000 c. P571,000 b. P659,600 d. P668,400 ___42. Fray acquires assets and liabilities of Mine on January 1,2011. To obtain these shares, Fray pays 400,000 and issues 10,000 shares of P20 par value common stock on this date. Fray’s stock had a fair value of P36 per share on that date. Fray also pays P15,000 to a local investment firm for arranging the transaction. An additional P10,000 was paid by Fray in stock issuance costs. The book values for both Fray and Mine as of January 1,2011 follow. The fair value of each of Fray and Mine accounts is also included. In addition, Mine holds a fully amortized trademark that still retains a P40,000 value. Fray Inc. Mine Inc. Accounts Book Value Fair Value Book Value Fair Value Cash P900,000 P900,000 P 80,000 P 80,000 Receivables 480,000 500,000 180,000 160,000 Inventory 660,000 700,000 260,000 300,000 Land 300,000 250,000 120,000 130,000 Buildings (net) 1,200,000 1,300,000 220,000 280,000 Equipment (net) 360,000 300,000 100,000 75,000 Accounts payable 480,000 480,000 60,000 60,000 Long-term liabilities 1,140,000 1,200,000 340,000 300,000 Common stock 1,200,000 80,000 Retained earnings 1,080,000 480,000 Assuming the combination is accounted for as an acquisition, immediately after the acquisition, in the statement of financial position of Fray Inc. What amount will be reported for goodwill? a. P55,000 c. P70,000 b. P65,000 d. P135,000 ___43. Using the same data in number 42, what amount will be reported for receivables? a. P660,000 c. P500,000 b. P640,000 d. P460,000 ___44. Using the same data in number 42, what amount will be reported for inventory? a. P960,000 c. P700,000 b. P920,000 d. P620,000 ___45. Using the same data in number 42, what amount will be reported for buildings (net) a. P1,420,000 c. P1,140,000 b. P1,260,000 d. P1,480,000 ___46. Using the same data in number 42, what amount will be reported for equipment (net) a. P385,000 c. P435,000 b. P335,000 d. P360,000 ___47. Using the same data in number 42, what amount will be reported for long-term liabilities? a. P1,480,000 c. P1,180,000 b. P1,440,000 d. P1,100,000 ___48. Using the same data in number 42, what amount will be reported for common stock? a. P1,200,000 c. P1,400,000 b. P1,280,000 d. p1,480,000 ___49. Using the same data in number 42, what amount will be reported for retained earnings? a. P1,065,000 c. P1,525,000


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b. P1,080,000

d. P1,560,000

___50. Using the same data in number 42, what amount will be reporte d for additional paid in capit al? a. P165,000 c. P160,000 b. P150,000 d. P175,000 ___51. Using the same data in number 42, what amount will be reporte d for cash after the purchase tr ansaction? a. P980,000 c. P875,000 b. P900,000 d. P555,000 ___52. Prid Corporatio n owns an 80% interest in Sed Corporation and at December 31,2011, P rid investment in Sed on a cost basis was equal to 80% of Sed’s stockholder’s equity. During 2011, Sed sold merchandise to Prid for P100,000 at a gross profit to Sed of P20,000. At December 31,2012 half of this merchandise is included in Prid’s inventory. Separate incomes for Prid and Sed for 2012 are summarized below: Prid Sed Sales P500,000 P300,000 Cost of sales (250,000) (200,000) Gross profit P250,000 P100,000 Operating expenses (125,000) (40,000) Separate incomes P125,000 P 60,000 What is the income from Sed for 2012? a. P48,000 c. P8,000 b. P40,000 d. P-0 ___53. Using the same data in number 52, what is the consolidated cost of sales for 2012? a. P460,000 c. P440,000 b. P450,000 d. P360,000 ___54. Using the same data in number 52, what is the noncontrolling int erest in net income for 2012? a. P60,000 c. P12,000 b. P48,000 d. P10,000 ___55. Income statement information for the year 2012 for Perfect Corporation and its 60% owned subsidiary, Seven Corporation, is as follows: Perfect Seven Sales P900,000 P350,000 Cost of sales 400,000 250,000 Gross profit P500,000 P100,000 Operating expenses 250,000 50,000 Seven’s net income P 50,000 Perfect’s separate income P250,000 Intercompany sales for 2012 are upstream (from Seven to Perfect) and total P100,000. Perfect’s December 31,2011 and December 31,2012 inventories contain unrealized profits of P5,000 and P10,000, respectively. What is the consolidated sales for 2012? a. P900,000 c. P1,190,000 b. P1,150,000 d. P1,250,000 ___56. Using the same data in number 55, what is the consolidated cost of sales for 2012? a. P545,000 c. P555,000 b. P550,000 d. P560,000 ___57. Using the same data in number 55, what is the CNI attribut able to parent for 2012? a. P277,000 c. P282,000 b. P280,000 d. P305,000 ___58. Income information for 2012 taken from the separate company financial statements of Peras Corporation and its 75% owned subsidiary, Sky Corporation is presented as follows: Peras Sky Sales P1,000,000 P460,000 Gain on sale of building 20,000 Dividend income 75,000 -


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Cost of goods sold (500,000) (260,000) Depreciation expense (100,000) ( 60,000) Other expenses (200,000) ( 40,000) Net income P 295,000 P100,000 Peras gain on sale of building relates to a building with a book value of P40,000 and a 10-year remaining useful life that was sold to Sky for P60,000 on January 1,2012. At what amount will the gain on sale of building appear on the consolidated income statement of Peras and Sy for the year 2012? a. zero c. P15,000 b. P5,000 d. P20,000 ___59. Using the same data in number 58, what is the consolidated depreciation expense for 20 12? a. P158,000 c. P162,000 b. P160,000 d. P180,000 ___60. Using the same data in number 58, what is the CNI attributable to parent for 2012? a. P295,000 c. P275,000 b. P277,000 d. P220,000 ___61. The financial statements for Goodwin Inc. and Corr Company Goodwin’s business combination transaction regarding Corr, follow: Goodwin Revenues P2,700,000 Expenses 1,980,000 Net income P 720,000

for the year ended December 31,2011 prior to Corr P 600,000 400,000 P 200,000

Retained earnings,1/1 Net income Dividends Retained earnings, 12/31

P2,400,000 720,000 (270,000) P2,850,000

P 400,000 200,000 ( - ) P 600,000

Cash Receivables and inventory Buildings, net Equipment, net Total assets

P 240,000 1,200,000 2,700,000 2,100,000 P6,240,000

P 220,000 340,000 600,000 1,200,000 P2,360,000

Liabilities P1,500,000 P 820,000 Common stock 1,080,000 400,000 Additional paid in capital 810,000 540,000 Retained earnings 2,850,000 600,000 Total liability and stockholder’s equity P6,240,000 P2,360,000 On December 31,2011, Goodwin issued P600,000 debt and 30,000 shares of its P10 par value common stock to the owners of Carr to purchase all of the outstanding shares of that company. Goodwin shares had a fair value of P40 per share. Goodwin paid P25,000 to a broker for arranging the transaction. Goodwin paid P35,000 in stock transaction costs. Corr’s equipment was actually worth P1,400,000 but its building were only valued at P560,000. What amount is the investment account recorded on Goodwin’s books before consolidation? a. P1,540,000 c. P1,825,000 b. P1,800,000 d. P1,860,000 ___62. Using the same data in number 61, what is the consolidated revenues for 2011? a. P3,300,000 c. P1,540,000 b. P2,700,000 d. P720,000 ___63. Using the same data in number 61, what is the consolidated expense for 2011? a. P1,980,000 c. P2,015,000 b. P2,005,000 d. P2,040,000 ___64. Using the same data in number 61, what is the consolidated cash account at Decem ber 31,2011? a. P460,000 c. P425,000 b. P435,000 d. P400,000


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___65. Using the same data in number 61, what is the consolidated buildings net, account at December 31.2011? a. P2,700,000 c. P3,260,000 b. P3,370,000 d. P3,300,000

___66. Using the same data in number 61, what is the consolidated goodwill account at December 31,2011? a. P -0c. P125,000 b. P100,000 d. P160,000 ___67. Using the same data in number 61, what is the consolidated comm on stock account at December 31,2011? a. P1,080,000 c. P1,675,000 b. P1,380,000 d. P1,910,000 ___68. Using the same data in number 61, what is the consolidated additional paid in capital at December 31,2011? a. P810,000 c. P1,675,000 b. P1,350,000 d. P1,910,000 ___69. Using the same data in number 61, what is the consolidated retained earnings at December 31,2011? a. P2,800,000 c. P2,850,000 b. P2,828,000 d. P3,425,000 ___70. On January 1,2011, Park Corporation and Strand Corporation and their condensed Statements of Financial Position are as follows: Park Corp. Strand Corp. Current assets P 70,000 P 20,000 Non-current assets 90,000 40,000 Total assets P160,000 P 60,000 Current liabilities P 30,000 P 10,000 Long-term debt 50,000 Stockholder’s equity 80,000 50,000 Total liabilities and stockholder’s equity P160,000 P 60,000 On January 2,2011, Park Corporation borrowed P60,000 and used the proceeds to obtain 80% of the outstanding common shares of Strand Corporation. The acquisition price was considered proportionate to Strand’s fair value. The P60,000 debt is payable in 10 equal annual principal payments plus interest, beginning December 31,2011. The excess fair value of the investment over the underlying book value of the acquired net assets is allocated to inventory (60%) and to goodwill (40%). On a consolidated statement of financial position as of January 2,2011, what is the amount of goodwill using proportionate or partial goodwill? a. P-0c. P10,000 b. P8,000 d. P20,000 ___71. Using the same data in number 69, what is the amount of goodwill using full fair value or t otal goodwill? a. P-0c. P10,000 b. P8,000 d. P20,000 ___72. Using the same data in number 69, what is the amount of curr ent assets? a. P105,000 c. P100,000 b. P102,000 d. P90,000 ___73. Using the same data in number 69, what is the amount of noncurrent assets using the partial goodwill method? a. P130,000 c. P138,000 b. P134,000 d. P140,000 ___74. Using the same data in number 69, what is the amount of noncurrent assets using the total goodwill m ethod? a. P130,000 c. P138,000 b. P134,000 d. P140,000 ___75. Using the same data in number 69, what is the amount of curr ent liabilities? a. P50,000 c. P40,000 b. P46,000 d. P30,000


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___76. Using the same data in number 69, what us the amount of noncurrent liabilities? a. P110,000 c. P90,000 b. P104,000 d. P50,000 ___77. Using the same data in number 69, what is the amount of shareholder ’s equity using partial goodwill? a. P80,000 c. P95,000 b. P93,000 d. P130,000 ___78. Using the same data in number 69, what is the amount of stockholder’s equity using total goodwill method? a. P80,000 c. P95,000 b. P93,000 d. P130,000 ___79. On January 1,2011, Pure Company purchased 80% of the outstanding shares of Sure Company at a cost of P1,000,000. On that date, Sure Company had P400,000 of capital stock and P600,000 of retained earnings. On July 1,2011, Sure Company sold an equipment with a book value of P60,000 to Pure Company for P80,000. For 2011 and 2012, the results of their operations are: 2011 2012 Pure Co. Sure Co. Pure Co. Sure Co. P400,000 P200,000 P300,000 P150,000 Net income from own operations Dividends paid 100,000 50,000 80,000 20,000 The intercompany gain is included in the net income of Sure Company. The equipment sold is expected to have a useful life of five years from the date of sale. What is the noncontrolling interests in net assets on December 31? 2011 2012 2011 2012 a. P226,400 P256,800 c. P226,000 P252,400 b. P226,400 P253,200 d. P230,000 P256,000 ___80. Scroll Inc., a wholly owned subsidiary of Pirn Inc. began operations on January 1,2012. The following information is from the condensed 2012 income statements of Pirn and Scroll: Pirn Scroll Sales to Scroll P100,000 PSales to others 400,000 300,000 P500,000 P300,000 Cost of goods sold: Acquired from Pirn 80,000 Acquired from others 350,000 190,000 Gross profit P150,000 P 30,000 Depreciation 40,000 10,000 Other expenses 60,000 15,000 Income from operations P 50,000 P 5,000 Gain on sale of equipment to Scroll 12,000 Income before income taxes P 62,000 P 5,000 Additional information: Sales by Pirn to Scroll are made on the same terms as those made to third parties. Equipment purchased by Scroll from Pirn for P36,000 on January 1,2012 is depreciated using the straight line method over four years. For purposes of consolidation on December 31,2012, what amount of intercompany profit that should be eliminated from Scroll’s inventory and the amount of depreciation expense in the consolidated financial statements, respectively? a. P12,000 and P50,000 c. P10,000 and P44,000 b. P20,000 and P43,000 d. P6,000 and P47,000  


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BC and CL

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