What is amount of consolidated retained earnings on december

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Reference no: EM133906320

Problem

On January 1, Year 1, Entity A acquired 70% of outstanding ordinary shares of Entity B at a price of P210, 000. On the same date, the net assets of Entity B were reported at P260, 000. On January 1, Year 1 Entity A reported retained earnings of P2, 000, 000 while Entity B reported retained earnings of P200, 000. All the assets and liabilities of Entity B are fairly valued except machinery which is undervalued by P80, 000 and inventory which is overvalued by P10, 000. The said machinery has remaining useful life of four years while 40% of the said inventory remained unsold at the end of Year 1. For the year ended December 31, Year 1, Entity A reported net income of P1, 000, 000 and declared dividends of P200, 000 in the separate financial statements while Entity B reported net income of P150, 000 and declared dividends of P20, 000 in the separate financial statements. Entity A accounted the investment in Entity B using cost method in the separate financial statements. Get the instant assignment help. What is the amount of consolidated retained earnings on December 31, Year 1?

Reference no: EM133906320

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