On January 1, 2020, Naruto Inc acquired 75% interest in Sakura, Inc for Php750,000.
Information below on acquisition date (January 1, 2020)
Sakura Inc identifiable assets have a carrying amount of Php700,000 and Fair Value of Php900,000. The difference is due to the ff:
Carrying Amount Fair Value FV - Adjustment
Inventory 200,000 250,000 50,000
Equipment 400,000 550,000 150,000
600,000 800,000 200,000
Statement of Financial Position
As of December 31, 2020
Naruto Sakura
Assets
Cash 230,000 600,000
Accounts Receivable 750,000 250,000
Inventory 1,500,000 180,000
Investment in subsidiary 750,000
Equipment, net 1,500,000 300,000
Total Assets 4,730,000 1,330,000
Liabilities and Equity
Accounts Payable 1,280,000 300,000
Total Liabilities 1,280,000 300,000
Share Capital 1,700,000 400,000
Share Premium 650,000 100,000
Retained Earnings 1,100,000 530,000
Total Equity 3,450,000 1,030,000
Total Liabilities and Equity 4,730,000 1,330,000
Statement of Profit or Loss
For the year ended December 31, 2023
Naruto Sakura
Sales 3,000,000 1,500,000
Cost of Goods Sold - 1,650,000 - 750,000
Gross Profit 1,350,000 750,000
Depreciation Expense - 400,000 - 200,000
Distribution costs - 350,000 - 220,000
Net Income 600,000 330,000
There were no dividends declared, no intercompany transactions and no impairment of goodwill in 2020.
Requirement:
1. Prepare the consolidated financial statements
2. NCI, as of December 31, 2020
3. Consolidated Retained Earnings
4. Consolidated Total Assets
5. Consolidated Equity, attributable to Parent
6. Non-controlling interest, net income NCINI
1 Statement of Financial Position
As of December 31, 2020
Assets
Cash 830,000
Accounts Receivable 1,000,000
Inventory 1,680,000
Investment in subsidiary -
Equipment, net 1,925,000
Goodwill 100,000
Total Assets 5,535,000
Liabilities and Equity
Accounts Payable 1,580,000
Total Liabilities 1,580,000
Share Capital 1,700,000
Share Premium 650,000
Retained Earnings 1,291,250
Owners of Parent 3,641,250
NCI 313,750
Total Equity 3,955,000
Total Liabilities and Equity 5,535,000
Sakura Jan. 1 Dec. 31 Net Change
Net Assets @ CA 700,000 1,030,000 330,000
FV - Adjustments 200,000 125,000 - 75,000
Net Assets at FV 900,000 1,155,000 255,000
FVA 01/01/20 Useful Life Depreciation FVA 12/31/20
Inventory 50,000 - 50,000 -
Equipment 150,000 6 25,000 125,000
200,000 75,000 125,000
2 Consideration Transferred 750,000
Divide: Controlling Interest 75%
Total 1,000,000
Multiply: NCI % 25%
FV of NCI, Implied 250,000
FV of NIA 900,000
Multiply: NCI % 25%
NCI, Proportionate Share 225,000
NCI at Acquisition-date 250,000
NCI's share in NC 63,750
NCI, end 313,750
3 Parent's RE 1,100,000
Parent's Share in NC 191,250
Consolidated Retained Earnings 1,291,250
Net Change 255,000
Multiply: Controlling Interest 75%
Parent's Share in NC 191,250
4 Naruto Sakura Consolidated
Cash 230,000 600,000 830,000
Accounts Receivable 750,000 250,000 1,000,000
Inventory 1,500,000 180,000 1,680,000
Investment in subsidiary 750,000 - -
Equipment, net 1,500,000 300,000 1,925,000
Goodwill - - 100,000
Total Assets 4,730,000 1,330,000 5,535,000
5 Naruto Sakura Consolidated
Share Capital 1,700,000 400,000 1,700,000
Share Premium 650,000 100,000 650,000
Retained Earnings 1,100,000 530,000 1,291,250
Owners of Parent - - 3,641,250
NCI - - 313,750
Total Equity 3,450,000 1,030,000 3,955,000
6 Net Change 255,000
Multiply: Controlling Interest 25%
Parent's Share in NC 63,750
