Question

In: Accounting

On January 1, 2008, Bacil Company purchased 80 percent of the outstanding shares of Lou Company...

On January 1, 2008, Bacil Company purchased 80 percent of the outstanding shares of Lou Company at a cost of P910,000. On that date, Lou Company had P390,000 worth of outstanding shares and P650,000 worth of accumulated profits. For 2008, Bacil Company had income of P390,000 from its own operations and paid dividends of P130,000. For 2008, Lou Company reported a net income of P195,000 and paid dividends of P65,000. All of the assets and liabilities of Lou Company had book values approximately equal to their respective market values. On April 1, 2008, Lou Company sold equipment with a book value of P39,000 to Bacil Company for P78,000. The gain on the sale is included in the income of Lou Company indicated above. The equipment is expected to have a useful life of five years from the date of sale.

Required:

1. Compute the consolidated net income for 2008.

2. Compute the net income attributable to equity holders of the parent.

3. Compute the Non-controlling interest in Net Income of Subsidiary for 2008.

4. Compute the Non-controlling interest in Net Assets of Subsidiary on December 31, 2008.

Solutions

Expert Solution

1. Consolidated net income = P390000 + P195000 - P39000(Profit on sale of asset)

= P546000

2. Net income attributable to equity holders of parent = P546000*80%

= P436800

3. Non controlling interest in net income = P546000*20%  

= P109200

4. Non controlling interest in net assets =(P390000+P650000)*20% + P109200

=P317200

ekkarill92 answered 2 years ago
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