Professional Documents
Culture Documents
12. D
"1
2. Solution:
Nov. 1, No entry
20x1
3. Solutions:
Requirement (a):
(13.75 x 100,000) = 1,375,000
Requirement (b):
(13.80 – 13.75) x 100,000 = (5,000) loss
Requirement (c):
(13.75 x 100,000) = 1,375,000
Requirement (d):
(13.80 x 100,000) = 1,380,000
Requirement (e):
(13.50 – 13.80) x 100,000 = 30,000 gain
Requirement (f):
(13.50 – 13.75) x 100,000 = 25,000 gain
4. D
5. D
6. A
7. B
"2
8. A
9. B
10. Solutions:
Step 1: Analysis of effects of intercompany transaction
There are no intercompany transactions in the problem.
"3
Sub.'s net assets at fair value – Dec. 31, 20x1 (Step 2) $15,000
Multiply by: NCI percentage 30%
Total 4,500
Add: Goodwill to NCI net of accumulated impairment
losses -
NCI in net assets – Dec. 31, 20x1 (in dollars) $4,500
Multiply by: Closing rate ₱45
NCI in net assets – Dec. 31, 20x1 (in pesos) ₱202,500
Consolidation adjustments:
Parent's share in the net change in ₱184,8
Sub.'s net assets (a) 00
(a)
Parent’s share in the net change in Subsidiary’s net assets is
computed as:
Net change in Sub.’s net assets (in dollars) (Step 2) $6,000
Multiply by: Controlling interest 70%
Parent’s share in the change in Sub.’s net assets $4,200
Multiply by: Average exchange rate 44
Parent’s share in the net change in Sub.’s net assets ₱184,800
"4
The translation gain (loss) recognized in other comprehensive income
in the consolidated financial statements is computed as follows:
Share in
translation
difference
Pool Swim
Co. Co.
(70%) (30%)
₱387,00
Net assets, Jan. 1 - at opening rate ($9K x ₱43)
0
3) Translation of goodwill
₱24,20
Total translation gain – OCI ₱31,400 ₱7,200
0
"5
₱700,0
Profits before adjustments 00 ₱264,000(a) ₱964,000
Consolidation adjustments:
Unrealized profits - - -
700,00
Profits before FVA 0 264,000 964,000
Depreciation of FVA - - -
Impairment of goodwill - - -
700,00
Consolidated profit 0 264,000 964,000
₱700,0
Consolidated comp. income 00 ₱264,000 ₱995,400
(a)At average rate ($6,000 x 44 = ₱264,000)
"6
(b) Shares in Sub.’s profit before FVA (Step 6): (264K x 70%); (264K x 30%)
Consolidated
ASSETS (pesos)
Investment in subsidiary -
Other assets [10M + (32K x 45)] 11,440,000
Goodwill (Step 3) 166,500
TOTAL ASSETS 11,606,500
Consolidate
d
(pesos)
"7
Profit attributable to owners of parent (Step 7) 884,800
2. D
9. D 26.75 – The exchange rate when title to the goods passed to the
buyer.
"8
13. B (See Step 3 below)
Solutions:
Step 1: Analysis of effects of intercompany transaction
We can leave this out because there are no intercompany
transactions in the problem.
6,000,00
Consideration transferred (in wons) 0
"9
Non-controlling interest in the acquiree (5.6M x 20%) – (Step 1,120,00
2) 0
Previously held equity interest in the acquiree -
7,120,00
Total 0
(5,600,00
Fair value of net identifiable assets acquired (Step 2) 0)
1,520,00
Goodwill at acquisition date 0
Accumulated impairment losses since acquisition date -
1,520,00
Goodwill, net – current year (in wons) 0
Multiply by: Closing rate ₱0.05
Goodwill, net – current year (in pesos) ₱76,000
Step 4: Non-controlling interest in net assets
XYZ's net assets at fair value – Dec. 31, 20x1 (in wons) (Step
2) 6,560,000
Multiply by: NCI percentage 20%
Total 1,312,000
Add: Goodwill to NCI net of accumulated impairment
losses -
NCI in net assets – Dec. 31, 20x1 (in wons) 1,312,000
Multiply by: Closing rate ₱0.05
NCI in net assets – Dec. 31, 20x1 (in pesos) ₱65,600
No goodwill is attributed to NCI because NCI is measured at proportionate share.
Consolidation adjustments:
ABC's share in the net change in XYZ's net ₱30,7
assets (a) 20
"10
Gain or loss on extinguishment of bonds -
Impairment loss on goodwill attributable to
Parent -
Net consolidation adjustments 30,720
₱2,610,72
Consol. retained earnings – Dec. 31, 20x1 0
(a) ABC’s share in the net change in XYZ’s net assets is computed as:
960,00
Net change in XYZ’s net assets (in wons) (Step 2) 0
Multiply by: Controlling interest 80%
768,00
ABC’s share in the change in XYZ’s net assets (in wons)
0
Multiply by: Average exchange rate 0.04
ABC’s share in the net change in XYZ’s net assets (in ₱30,72
pesos) 0
Share in
translation
difference
ABC XYZ,
Co. Inc.
(80%) (20%)
"11
2) Translation of changes in net assets during the period:
3) Translation of goodwill
127,68 ₱24,32
Total translation gain – OCI 152,000
0 0
1,440,00
Profits before adjustments 0 38,400(a) 1,478,400
Consolidation adjustments:
Unrealized profits - - -
1,440,00
Profits before FVA 0 38,400 1,478,400
Depreciation of FVA - - -
Impairment of goodwill - - -
"12
1,440,00
Consolidated profit 0 38,400 1,478,400
Other comprehensive
income:
Translation gain - (Step 5A) - - 152,000
1,440,00
Consolidated comp. income 0 38,400 1,630,400
(a)At average rate (960,000 x .04 = ₱38,400)
"13
Consolidation Worksheet
December 31, 20x1
XYZ Cons
ABC XYZ,
, olidat
Co. Inc. Tran
Inc. ed
(in (in slati Consolidation
(in (in
peso won on
pes pesos
s) s)
os) )
Investment in 180,0
- (eliminated) -
subsidiary 00
(8M + 260K +
8,000 5,200 0.05 260, 8,340,
Other assets 80K FVA) (Step
,000 ,000 (CR) 000 2)
000
76,00
Goodwill - (Step 3)
0
"14
Profit for the 1,440 960,0 38,4 1,478,
year ,000 00 00 400
Other
comprehensive
income:
152,0
Translation gain (Step 5A)
00
"15
Optional reconciliations:
Total assets of ABC Co. 8,180,000
Total assets of XYZ, Inc. (5,200,000 x 0.05 closing rate) 260,000
Investment in subsidiary (180,000)
Fair value adjustments - net (Step 2) 80,000
Goodwill – net (Step 3) 76,000
Effect of inter-company transactions -
Consolidated total assets 8,416,000
"16
19. C (See Step 7 above)
1. Solution:
2. Solution:
Sept. 1, Accounts receivable (250K x 1.20) 300,000
20x1 Sale 300,000
Dec. 31, Foreign exchange loss 2,500
20x1 Accounts receivable 2,500
"17
3. Solutions:
Step 1: Analysis of effects of intercompany transaction
There are no intercompany transactions in the problem.
"18
Total 12,000
Add: Goodwill to NCI net of accumulated impairment
losses -
NCI in net assets – Dec. 31, 20x1 (in dollars) ¥12,000
Multiply by: Closing rate ₱0.54
NCI in net assets – Dec. 31, 20x1 (in pesos) ₱6,480
Consolidation adjustments:
Parent's share in the net change in ₱14,04
Sub.'s net assets (a) 0
(a)
Parent’s share in the net change in Subsidiary’s net assets is
computed as:
Net change in Sub.’s net assets (in yens) (Step 2) ¥30,000
Multiply by: Controlling interest 90%
Parent’s share in the change in Sub.’s net assets ¥27,000
Multiply by: Average exchange rate 0.52
Parent’s share in the net change in Sub.’s net assets ₱14,040
"19
Share in
translation
difference
Subsidi
Parent ary
(90%)
(10%)
3) Translation of goodwill
₱700,0
Profits before adjustments 00 ₱15,600(a) ₱715,600
Consolidation adjustments:
"20
Unrealized profits - - -
700,00
Profits before FVA 0 15,600 715,600
Depreciation of FVA - - -
Impairment of goodwill - - -
700,00
Consolidated profit 0 15,600 715,600
₱700,0
Consolidated comp. income 00 ₱15,600 ₱720,560
(a)At average rate (¥30,000 x 0.52 = ₱15,600)
Consolidated
ASSETS (pesos)
"21
Investment in subsidiary -
Other assets [1.5M + (140K x 0.54)] 1,575,600
Goodwill (Step 3) 10,260
TOTAL ASSETS 1,585,860
Consolidate
d
(pesos)
"22
Profit for the year 715,600
"23