Chapter 15 Multiple Choice Problems 1. c – at fair value 2. c [P300,000 – (P35,000 + P60,000 + 125,000 + P250,000 – P65,000 – P150,000)] 3. d Consideration transferred P300,000 Less: Book value of SHE of S (P100,000 + P115,000) 215,000 Allocated excess (excess of fair value or cost over book value) - sometimes termed as “Differential” P 85,000 4. a – Investment in subsidiary in the consolidated statements is eliminated in its entirety. 5. d Consideration transferred P150,000 Less: Book value of SHE of S (P40,000 + P52,000) 92,000 Allocated excess (excess of fair value or cost over book value) - sometimes termed as “Differential” P 58,000 6. b – [P150,000 – (P173,000 – P40,000 – P5,000)] 7. d - P600,000 - P15,000 - P255,000 = P330,000 8. c - P475,000 - P300,000 = P175,000 debit 9. b – fair value 10. d – fair value 11. d – fair value 12. c Full-goodwill: Fair value of Subsidiary: Consideration transferred Add: FV of NCI Less: BV of SHE of Silver (P100,000 + P180,000) x 100% Allocated excess Less: Over/under valuation of A and L: Inc. (Dec.) Inventory (P65,000 – P70,000) x 100% Land (P100,000 – P90,000) x 100% Buildings and equipment (P300,000 – P250,00) x 100% Goodwill – full
P300,000 100,000
P400,000 280,000 P120,000
P( 5,000 ) 10,000 50,000
If partial-goodwill, no answer available, computed as follows: Fair value of Subsidiary: Consideration transferred Less: BV of SHE of Silver (P100,000 + P180,000) x 75% Allocated excess Less: Over/under valuation of A and L: Inc. (Dec.) Inventory (P65,000 – P70,000) x 75% P( 3,75 0) Land (P100,000 – P90,000) x 75% 7,500 Buildings and equipment (P300,000 – P250,00) x 37,500 75% Goodwill – full
__55,000 P 65,000
P300,000 _210,000 P 90,000
__41,250 P 48,750
13. a – Investment in Silver will be eliminated in the consolidated balance sheet 14. d FV of SHE of S: Book value of SHE of S (P100,000 + P180,000)………………..P 280,000 Adjustments to reflect fair value ……………………………… 55,000 FV of SHE of S……………………………………………………… P 335,000 Multiplied by: NCI%.................................................................... 25% FV of NCI (partial)………………………………………………….P 83,750 Add: NCI on full goodwill (P65,000 – P48,750)……………….. 16,250 FV of NCI (full-goodwill)*…………………………………………P100,000 * same with the NCI given per problem
15. b – P135,000 = P90,000 + P45,000 16. d Full-goodwill: Fair value of Subsidiary: Consideration transferred Add: FV of NCI Less: BV of SHE of Silver (P40,000 + P120,000) x 100% Allocated excess Less: Over/under valuation of A and L: Inc. (Dec.) Inventory (P45,000 – P40,000) x 100% Land (P60,000 – P40,000) x 100% Goodwill – full
P160,000 _40,000
17. a Total Assets of Gulliver (Jonathan) Less: Investment in Sea-Gull Corp. Book value of assets of Sea Corp. Book value reported by Gulliver/Jonathan and Sea Increase in inventory (P45,000 – P40,000) Increase in land (P60,000 – P40,000) Goodwill (full)* Total assets reported
P200,000 _160,000 P 40,000
P 5,000 20,000
25,000 P 15,000 P610,000 (160,000) P 450,000 230,000 P 680,000 5,000 20,000 15,000 P 720,000
18. c – P100,000 + P95,000 + P30,000 + P40,000 = P265,000 19. c
FV of SHE of S: Book value of SHE of S (P40,000 + P120,000)………………….P 160,000 Adjustments to reflect fair value [(P45,000 + P60,000) (P40,000 + P40,000)………….……………………………… 25,000 FV of SHE of S……………………………………………………… P 185,000 Multiplied by: NCI%.................................................................... 20% FV of NCI (partial)………………………………………………….P 37,000 Add: NCI on full goodwill (P15,000 – P12,000)……………….. 3,000 FV of NCI (full-goodwill)*………………………………………… P 40,000 * same with the NCI given per problem Partial Goodwill Fair value of Subsidiary: Consideration transferred
P160,000
Less: BV of SHE of S (P40,000 + P120,000) x 80% Allocated excess Less: Over/under valuation of A and L: Inc. (Dec.) Inventory (P5,000 x 80%) Land (P20,000 x 80%) Goodwill – partial
_128,000 P 32,000 P 4,000 16,000
__20,000 P 12,000
20. a - The amount reported by Jonathan Corporation 21. a Jonathan stockholders' equity(P200,000 + P205,000)……………….. P405,000 NCI (full-goodwill) – refer to No. 19…………………………………….. 40,000 Consolidated stockholders’ equity……………………………………. P445,000 22. d – [P132,000 + (P38,000 + {P60,000 – P38,000}] or P132,000 + P60,000 23. b Total Assets of P. P1,278,000 Less: Investment in Swimmer Corp. (440,000) P 838,000 Book value of assets of S Corp. 542,000 Book value reported by P and S P1,380,00 0 Increase in inventory (P60,000 – P38,000) 22,000 Increase in land (P60,000 – P32,000) 28,000 Increase in plant assets [P350,000 – (P300,000 – 110,00 P60,000)] 0 Goodwill (full)* 26,667 Total assets reported P1,566,667 *(P440,000/75%) – (P702,000 – P142,000) = P26,667 If partial-goodwill: Total Assets of P. Less: Investment in S Corp. Book value of assets of S Corp. Book value reported by P and S Increase in inventory (P60,000 – P38,000) Increase in land (P60,000 – P32,000) Increase in plant assets [P350,000 – (P300,000 – P60,000)] Goodwill (partial)* Total assets reported *[P440,000 – (P702,000 – P142,000) x 75%] 24. 25.
P1,278,000 (440,000) P 838,000 542,000 P1,380,00 0 22,000 28,000 110,00 0 20,000 P1,540,000
d P215,000 = P130,000 + P70,000 + (P85,000 - P70,000) a Partial Goodwill Fair value of Subsidiary: Consideration transferred Less: BV of SHE of SSD (P50,000 + P90,000) x 70% Allocated excess Less: Over/under valuation of A and L: Inc. (Dec.) Inventory (P15,000 x 70%) P 10,500 Land (P20,000 x 70%) 14,000
P150,500 __98,000 P 52,500
24,500
Goodwill – partial 26.
P 28,000
c Full-goodwill: Fair value of Subsidiary: Consideration transferred Add: FV of NCI Less: BV of SHE of SS (P50,000 + P90,000) x 100% Allocated excess Less: Over/under valuation of A and L: Inc. (Dec.) Inventory (P70,000 – P85,000) x 100% Land (P25,000 – P45,000) x 100% Goodwill – full
P150,500 **64,500
P 15,000 20,000
P215,000 140,000 P 75,000 35,000 P 40,000
**given amount, but it should not be lower than the fair value of SHE – subsidiary amounting to P52,500 computed as follows :
FV of SHE of SS: Book value of SHE of SS (P50,000 + P90,000)…………….P 140,000 Adjustments to reflect fair value (P15,000 + P20,000)… 35,000 FV of SHE of SS……………………………………………… P 175,000 Multiplied by: NCI%.......................................................... 30% FV of NCI (partial)……………………………………………..P 52,500
27. b
Total Assets of Power Corp. Less: Investment in Silk Corp. Book value of assets of Silk Corp. Book value reported by Power and Silk Increase in inventory (P85,000 - P70,000) Increase in land (P45,000 - P25,000) Goodwill (full) Total assets reported
If partial-goodwill: Total Assets of Power Corp. Less: Investment in Silk Corp. Book value of assets of Silk Corp. Book value reported by Power and Silk Increase in inventory (P85,000 - P70,000) Increase in land (P45,000 - P25,000) Goodwill (partial) Total assets reported 28 .
d
P701,500
P 791,500 (150,500) P 641,000 405,000 P1,046,000 15,000 20,000 40,000 P1,121,000 P 791,500 (150,500) P 641,000 405,000 P1,046,000 15,000 20,000 28,000 P1,109,000
= (P61,500 + P95,000 + P280,000) + (P28,000 + P37,000 + P200,000)
29.
a Non-controlling interest (partial-goodwill): P52,500 NCI
FV of SHE of SSD: Book value of SHE of SS (P50,000 + P90,000)…………….P 140,000 Adjustments to reflect fair value (P15,000 + P20,000)… 35,000 FV of SHE of SSD P 175,000 Multiplied by: NCI%.......................................................... 30% FV of NCI (partial)……………………………………………..P 52,500
30 .
d Non-controlling interest (fulll-goodwill): P64,500 NCI
FV of SHE of SSD: Book value of SHE of SS (P50,000 + P90,000)…………….P 140,000 Adjustments to reflect fair value (P15,000 + P20,000)… 35,000 FV of SHE of SSD P 175,000 Multiplied by: NCI%.......................................................... 30% FV of NCI (partial)……………………………………………..P 52,500 Add: NCI on full-goodwill (P40,000 – P12,000)…………... 12,000 FV of NCI (full)…………………………………………………..P 64,500
