Reference no: EM132674494

Question - ACCOUNTING FOR BUSINESS COMBINATION

On December 31, 2015, P Company purchased 70 percent of the outstanding shares of S Company at a cost of P423, 250. On that date, S Company had P145, 000 worth of share capital and P362, 500 worth of accumulated profits.

For 2016, P Company had income of P290, 000 from its own operations and paid dividends of P145, 000. S Company, on the other hand reported income of P43, 500 and paid dividends of P29, 000. All assets and liabilities of S Company have book values approximately equal to their market values.

The beginning inventory of P Company includes P8, 000 of merchandise purchased from S Company on December 31, 2015 at 150 percent of cost. The ending inventory of P Company includes P13, 050 worth of merchandise purchased from S Company at the same mark-up. P Company uses the FIFO inventory costing. P Company uses the cost method to account for its investment is S Company.

Required -

1. Compute the consolidated net income for 2016.

2. Compute the Non-controlling Interest in Net Income of Subsidiary for 2016.