Reference no: EM133185759
Question - On January 2, 2020, Bowling Company purchases 70% of Spa Company's outstanding common stock. On January 4, 2020, there is intercompany sale of equipment costing P1,080,000 and accumulated depreciation of P540,000 for P675,000. The equipment has a remaining life of 6 years.
The following are the data before the inter-company sale of equipment on January 1, 2020:
|
Selling Affiliate
|
Buying Affiliate
|
|
Equipment (Cost)
|
4,500,000
|
1,700,000
|
|
Accumulated Depreciation
|
1,800,000
|
900,000
|
The net income on December 31 are:
|
2020
|
2021
|
|
Bowling Company
|
2,600,000
|
2,158,000
|
|
Spa Company
|
1,620,000
|
1,340,000
|
Both Companies provide one whole month depreciation if asset acquired during the first half of the month, otherwise, no depreciation on the month of acquisition. On the date of acquisition, one of the equipment of the subsidiary is undervalued by P150,000 compare to the book value which also has 6 years remaining life.
There are no dividends declared in year 2020 but in year 2021, dividends declared by Bowling Company and Spa Company were P250,000 and P100,000, respectively.
1. Assuming the sale is downstream, what is the consolidated net income attributable to parent in year 2020?
2. Assuming the sale is upstream, what is the consolidated net income attributable to parent stockholder's in year 2021.
3. What is the cost of equipment to be presented in 2016 consolidated balance sheet?