Original books

Consolidated
Date of acquisition
Ate

Parent
MINA

Bunso
80% Ate
20% MINA
Therefore:
Parent
IMI
DMI

75%
25%

60%
15%
25%

Goodwill computation
Net book value, Ate
Excess of FMV over cost
Inventory
Plant assets
FMV of net assets
Acquisition cost
FMV of NCI
Goodwill

Books of Mama
Dr
Investment in Ate
Cr
Cash

218,640.00
(218,640.00)

Dr
Dr
Dr
Cr
Cr

Common stock
APIC
Retained earnings
Investment in Ate
NCI- Ate

Dr
Dr
Dr
Cr
Cr

Inventory
Plant assets
Goodwill
Investment in Ate
NCI- Ate

Books of Ate
Goodwill computation
Net book value, Ate
Excess of FMV over cost
Inventory
Land
Plant assets
FMV of net assets
Acquisition cost
FMV of NCI
Gain on bargain purchase
Dr
Cr

Investment in Bunso
Cash

129,050.00
(129,050.00)

Dr
Dr
Dr
Cr
Cr

Common stock
APIC
Retained earnings
Investment in Ate
NCI- Bunso

Dr
Dr
Dr
Cr
Cr
Cr

Inventory
Plant assets
Land
Other income - negative goodwill
Investment in Bunso
NCI

Check figure
Investment in Ate, combined
WPEEs
WPEE 1
WPEE 2

Investment in Ate, Bunso

WPEEs
WPEE 1
WPEE 2

30-Jun-06
Investment in Ate
Dr Common stock
Dr APIC
Dr Retained earnings
Dr Inventory
Dr Plant assets
Dr Goodwill
Cr Investment in Ate
Cr NCI - Ate
< to eliminate investment in Ate>

Pre-acquisition entry and valuation

Post acquisition computation

RE, beg. (Ate)
Pre-acquisition RE
Post acquisition

Dr Retained earnings, beg (Ate)

Cr Retained earnings, beg (Conso)
80%
Cr NCI - Ate
20%
<to establish post-acquisition retained earnings, conso>

18,400.00
1,600.00
16,800.00

Dr Retained earnings, beg (Conso)

Dr NCI - Ate
Cr Inventory
<to locate excess in fmv of inventory>
Dr Operating expense
Dr Retained earnings, beg (Conso)
Dr NCI - Ate
Cr Accumulated depreciation
<to locate excess in fmv of plant assets>

80%
20%

80%
20%

Dr Investment in Ate
Cr Goodwill
<impairment of investment - assuming goodwill is impaired>
Investment in Bunso
Dr Common stock
Dr APIC
Dr Retained earnings, beg (Bunso)
Dr Inventory
Dr Building
Dr Land
Cr Retained earnings, beg (Conso)
Cr Investment in Bunso
Cr NCI - Bunso only
< to eliminate investment in Bunso>

Postacq ni Bunso
Reported
Adustments
Inventory
PPE

NCI - Ate
NCI - Bunso
(2,160.00) (3,600.00)
150.00
150.00

250.00
250.00

Dr Retained earnings, beg (Bunso)

Cr Retained earnings, beg (Conso)
60%
Cr NCI - Ate and Bunso's Indirect
15%
Cr NCI - Bunso (Bunso's Direct)
25%
<to establish post-acquisition retained earnings.>
Dr
Dr

Retained earnings, beg (Conso)

NCI - Ate and Bunso's Indirect

60%
15%

(1,860.00)

(3,100.00)

(4,960.00)

Dr NCI - Bunso (Bunso's Direct)

Cr Inventory
<to locate excess in fmv of inventory>
Dr Operating expense
Dr Retained earnings, beg (Conso)
Dr NCI - Ate and Bunso's Indirect
Dr NCI - Bunso (Bunso's Direct)
Cr Accumulated depreciation
<to locate excess in fmv of plant assets>

Intercompany transaction
1
Sales by Ate to Mama invoiced at cost plus 33 1/3 were P120,000
Sales
Cost of goods sold
profit

120,000.00
90,000.00
30,000.00

where is the P120,000 ?

Inventory
Cost of goods sold

1,600.00
118,400.00 (eliminate)

Analysis of inventory
selling price of ate
cost to ate from 3rd parties
unrealized gross profit
2

1.33
1.00
0.33

Dr
Cr
Cr
Cr

Sales
Cost of goods sold - Mama
Cost of good sold - Ate
Inventory
Allocate UGP
Mama
NCI - Ate

1,600.00
1,200.00
400.00

Sales by Bunso to Mama invoiced at cost plus 25% were P36,000

Sales
Cost of goods sold
profit

36,000.00
28,800.00
7,200.00

where is the P36,000 ?

Inventory
Cost of goods sold

1,200.00
34,800.00 (eliminate)

Analysis of inventory
selling price of ate
cost to ate from 3rd parties
unrealized gross profit
3

133.33
100.00
33 1/3

Upstream - Ate

125.00
100.00
25

1.25
1.00
0.25

Upstream - Bunso
Dr
Cr
Cr
Cr

Sales
Cost of goods sold - Ate
Cost of good sold - Mama
Inventory
Allocate UGP
Mama
NCI - Ate
NCI - Bunso

1,200.00
960.00
240.00

Inventory of Ate at July 1, 2005 included P160 profits on goods received from Bunso
Dr
Dr
Dr
Cr

Upstream from Bunso

Retained earnings, conso
NCI - Ate and Bunso's Indirect
NCI - Bunso only
Inventory

Dr
Cr

Inventory
Cost of goods sold
Allocate UGP
Mama
NCI - Ate
NCI - Bunso

Dr
Cr

Payable
Receivable

25%

60%
15%
25%

Dividends

Dr
Cr
Cr

Bonds payable
Investment in Mama bonds
Investment in Mama bonds

Dr
Dr
Cr

Interest income
Interest income
Interest expense

Dividends declared by Ate

Dr
Dr
Cr

Dividends Income (Mama)

NCI - Ate and Bunso's Indirect
RE - Dividends (Ate)

80%
20%

Dividends declared by Bunso

Dr
Dr
Cr

Dividends Income (Ate)

NCI - Bunso (Direct)
RE - Dividends (Bunso)

75%
25%

Allocate Dividend Income

Mama
NCI - Ate
Dr
Cr

Dividends payable (Ate)

Receivable

80%

Dr
Cr

Dividends payable (Bunso)

Receivable

75%

249,600.00
2,000.00
4,000.00
255,600.00
218,640.00
51,120.00
269,760.00
14,160.00

240,000.00
8,000.00
1,600.00
(199,680.00)
(49,920.00)
2,000.00
4,000.00
14,160.00
(18,960.00)
(1,200.00)

204,480.00
218,640.00

51,120.00

14,160.00

249,600.00
(249,600.00)

20,160.00
(20,160.00)

166,400.00
1,000.00
4,000.00
5,000.00
176,400.00
129,050.00
44,100.00
173,150.00
(3,250.00)
164,000.00
2,400.00
(124,800.00)
(41,600.00)

166,400.00
(166,400.00)

1,000.00
5,000.00
4,000.00
10,000.00
(3,250.00)
(4,250.00)
(2,500.00) do not share in negative goodwill

218,640.00
(199,680.00)
(18,960.00)

129,050.00
(124,800.00)
(4,250.00)
-

240,000.00
8,000.00
1,600.00
2,000.00
4,000.00
14,160.00
(218,640.00)
(51,120.00)

16,800.00
(13,440.00)
(3,360.00)

<WPEE- 1A>

269,760.00
(269,760.00)

<WPEE- 1B>
(16,800.00)

d earnings, conso>
1,600.00
400.00
(2,000.00)

800.00
640.00
160.00
(1,600.00)

<WPEE- 1C>
2,000.00

<WPEE- 1D>
1,600.00

<WPEE- 1E>

ng goodwill is impaired>

164,000.00
2,400.00
1,000.00
5,000.00
4,000.00
(3,250.00)
(129,050.00)
(44,100.00)

14,400.00
(8,640.00)
(2,160.00)
(3,600.00)

600.00
150.00

<WPEE- 2A>

176,400.00

(176,400.00)

<WPEE- 2B>

(14,400.00)

<WPEE- 2C>

250.00
(1,000.00)

1,000.00

1,000.00
600.00
150.00
250.00
(2,000.00)

120,000.00
(118,400.00)
(1,200.00)
(400.00)

<WPEE- 2D>

2,000.00

<Interco - 1>

(120,000.00)

(320.00)
(80.00)

36,000.00
(34,800.00)
(960.00)
(240.00)

80%
20%

<Interco - 2>

(36,000.00)

(144.00)
(36.00)
(60.00)

60%

96.00
24.00
40.00
(160.00)

60%

15%
25%

25%

160.00
(160.00) Allocate

(96.00)
(24.00)
(40.00)

3,600.00
(3,600.00)

<Interco - 3A>

15%

<Interco - 3B>

60%
15%
25%

<Interco - 4>

88,000.00
(40,000.00)
(48,000.00)

<Interco - 5A>

3,200.00
3,840.00
(7,040.00)

<Interco - 5B>

Dr
24,960.00
6,240.00
(31,200.00)

<Interco - 6A1>

13,200.00
4,400.00
(17,600.00)

<Interco - 6A2>

10,560.00
2,640.00

80%
20%

13,440.00
(13,440.00)

<Interco - 6B>

7,200.00
(7,200.00)

<Interco - 6C>

Financial Statement
As of / for the period ended June 30, 2006

Mama

Sales
Dividends revenue
Interest income
Total revenues

(675,360.00)
(24,960.00)
(700,320.00)

(444,800.00)
(13,200.00)
(3,200.00)
(461,200.00)

(290,000.00)
(3,840.00)
(293,840.00)

Cost of sales
Operating expenses
Other expenses
Total expenses

490,400.00
44,080.00
64,000.00
598,480.00

333,600.00
42,800.00
32,000.00
408,400.00

232,000.00
20,000.00
16,000.00
268,000.00

(101,840.00)

(52,800.00)

(25,840.00)

Retained earnings, July 1, 2005

Net income
Dividends
Retained earnings, June 30, 2006

(4,000.00)
(101,840.00)
50,000.00
(55,840.00)

(18,400.00)
(52,800.00)
31,200.00
(40,000.00)

(16,800.00)
(25,840.00)
17,600.00
(25,040.00)

Cash
Receivables
Inventory
Investment in Ate shares
Investment in Bunso shares
Investment in Mama bonds
Land
Building
Accumulated depreciation
Goodwill
Other assets
Total assets

28,000.00
21,860.00
5,600.00
218,640.00
200,000.00
500,000.00
(204,000.00)

10,600.00
15,550.00
4,400.00
129,050.00
40,000.00
70,000.00
147,000.00
(63,000.00)

21,600.00
1,520.00
5,120.00
48,000.00
56,000.00
160,000.00
(64,000.00)

49,200.00
819,300.00

12,800.00
366,400.00

2,400.00
230,640.00

Accounts payable
Dividends payable
Provisions
Bonds payable
Total liabilities

(121,460.00)
(30,000.00)
(20,000.00)
(160,000.00)
(331,460.00)

(32,000.00)
(16,800.00)
(29,600.00)
(78,400.00)

(16,000.00)
(9,600.00)
(16,000.00)
(41,600.00)

Common stock
Additional paid in capital
Retained earnings
DNCI - A
INCI - B
DNCI - B
Total SHE

(420,000.00)
(12,000.00)
(55,840.00)

(240,000.00)
(8,000.00)
(40,000.00)

(164,000.00)

(487,840.00)

(288,000.00)

(189,040.00)

Total liabilities and SHE

(819,300.00)

(366,400.00)

(230,640.00)

Net income
Allocation
Parent
DNCI - A
INCI - B
DNCI - B

Ate

Bunso

80% 60%
20%
15%
25%

(25,040.00)

Financial Statement
As of / for the period ended June 30, 2006
Mama

Ate

Bunso
290,000

Sales
Dividends revenue
Interest income
Total revenues

675,360
24,960
700,320

444,800
13,200
3,200
461,200

Cost of sales
Operating expenses
Other expenses
Total expenses

490,400
44,080
64,000
598,480

333,600
42,800
32,000
408,400

232,000
20,000
16,000
268,000

Net income

101,840

52,800

25,840

Retained earnings, July 1, 2005

Net income
Dividends
Retained earnings, June 30, 2006

4,000
101,840
50,000
55,840

18,400
52,800
31,200
40,000

16,800
25,840
17,600
25,040

Cash
Receivables
Inventory
Investment in Ate shares
Investment in Bunso shares
Investment in Mama bonds
Land
Building
Accumulated depreciation
Other assets
Total assets

28,000
21,860
5,600
218,640

10,600
15,550
4,400

21,600
1,520
5,120

129,050
40,000
70,000
147,000
(63,000)
12,800
366,400

48,000
56,000
160,000
(64,000)
2,400
230,640

200,000
500,000
(204,000)
49,200
819,300

3,840
293,840

Accounts payable
Dividends payable
Provisions
Bonds payable
Total liabilities

121,460
30,000
20,000
160,000
331,460

32,000
16,800
29,600
78,400

16,000
9,600
16,000
41,600

Common stock
Additional paid in capital
Retained earnings
Total SHE

420,000
12,000
55,840
487,840

240,000
8,000
40,000
288,000

164,000

Total liabilities and SHE

819,300

366,400

230,640

25,040
189,040

Financial Statement
As of / for the period ended June 30, 2006
Mama

Ate

Bunso
290,000.00

Sales
Dividends revenue
Interest income
Total revenues

675,360.00
18,720.00
694,080.00

444,800.00
13,200.00
3,200.00
461,200.00

Cost of sales
Operating expenses
Other expenses
Total expenses

490,400.00
44,080.00
64,000.00
598,480.00

333,600.00
42,800.00
32,000.00
408,400.00

232,000.00
20,000.00
16,000.00
268,000.00

Net income

95,600.00

52,800.00

25,840.00

Retained earnings, July 1, 2005

Net income
Dividends
Retained earnings, June 30, 2006

4,000.00
95,600.00
50,000.00
49,600.00

10,400.00
52,800.00
31,200.00
32,000.00

8,800.00
25,840.00
17,600.00
17,040.00

28,000.00
21,860.00
5,600.00
155,340.00

10,600.00
15,550.00
4,400.00

21,600.00
1,520.00
5,120.00

48,000.00
56,000.00
160,000.00
(64,000.00)
2,400.00
230,640.00

3,840.00
293,840.00

Cash
Receivables
Inventory
Investment in Ate shares
Investment in Bunso shares
Investment in Mama bonds
Land
Building
Accumulated depreciation
Other assets
Total assets

200,000.00
500,000.00
(204,000.00)
49,200.00
756,000.00

129,050.00
40,000.00
70,000.00
147,000.00
(63,000.00)
12,800.00
366,400.00

Accounts payable
Dividends payable
Provisions
Bonds payable
Total liabilities

64,400.00
30,000.00
20,000.00
160,000.00
274,400.00

32,000.00
16,800.00
29,600.00
78,400.00

16,000.00
9,600.00
16,000.00
41,600.00

Common stock
Additional paid in capital
Retained earnings
Total SHE

420,000.00
12,000.00
49,600.00
481,600.00

240,000.00
16,000.00
32,000.00
288,000.00

164,000.00
8,000.00
17,040.00
189,040.00

Total liabilities and SHE

756,000.00

366,400.00

230,640.00