Step 1: Analysis of the subsidiary's net assets
Carrying Amount Fair Value Fair Value Adjustment
Inventory 102,000 134,000 32,000
Equipment 180,000 340,000 160,000
Totals 282,000 474,000 192,000
FVA, 1/1/2021 Useful life Depreciation
Inventories 32,000 N/A 32,000
Equipment 160,000 4 years 40,000
Totals 192,000 72,000
January 1, 2021 December 31, 2021 Net Change
Net assets at carrying amount 356,000 586,000
Fair value adjustments 192,000 120,000
Net assets at fair value 548,000 706,000 158,000
Step 2: Goodwill computation
Consideration transferred 700,000
Non-controlling interest (548,000 x 20%) 109,600
Totals 809,600
Fair value of net identifiable assets acquired 548,000
Goodwill - Jan. 1, 2021 261,600
Less: Accumulated impairment loss -
Goodwill - Dec. 31, 2021 261,600 (6)
Step 3: Non-controlling interest in net assets
Subsidiary's net assets at fair value, Dec. 31, 2021 706,000
Multiply by: NCI percentage 20%
Non-controlling interest in net assets, Dec. 31, 2021 141,200 (7)
Step 4: Consolidated retained earnings
Parent's retained earnings, Dec. 31, 2021
Parent's share in net change in subsidiary's net assets (158,000 x 80%)
Consolidated retained earnings, Dec. 31, 2021
Step 5: Consolidated profit or loss
Profits of Hades and Riguel (2,000,000 + 400,000) 2,400,000
Depreciation of FVA 72,000
Consolidated profit 2,328,000
The consolidated profit is attributed to the owners of the parent and NCI as follows:
Hades Riguel
Parent's profit before FVA 2,000,000 N/A
Subsidiary's profit before FVA 320,000 80,000
Depreciation 57,600 14,400
Totals 2,262,400 65,600 '(8)
Depreciation (72,000 x 80% = 57,600 share of Hades); (72,000 x 20% = 14,400 share of Riguel)
Subsidiary's profit before FVA (400,000 x 80% = 320,000 share of Hades); (400,000 x 20% = 80,000 share of R
HADES Group
Consolidated Statement of Financial Position
As of December 31, 2021
ASSETS
Cash (492,000 + 416,000) 908,000
Inventory (520,000 + 70,000 + 0FVA net, step 1) 590,000
Investment in subsidiary (eliminated) -
Equipment (660,000 + 320,000 + 120,000) 1,100,000
Goodwill (step 2) 261,600
TOTAL ASSETS 2,859,600 (9)
LIABILITIES AND EQUITY
Trade and other payables (492,000 + 220,000) 712,000
TOTAL LIABILITIES 712,000
Share capital (parent only) 1,040,000
Retained earnings (parent only, step 4) 966,400
Owners of Parent 2,006,400
Non-controlling interest (Step 3) 141,200
TOTAL EQUITY 2,147,600
TOTAL LIABILITIES AND EQUITY 2,859,600
Fair Value Adjustment
32,000
160,000
192,000
Depreciation FVA, 12/31/2021
32,000 -
40,000 120,000
72,000 120,000
Net Change
158,000
840,000
126,400
966,400
Consolidated
2,000,000
400,000
72,000
2,328,000
400 share of Riguel)
400,000 x 20% = 80,000 share of Riguel)
Step 1: Analysis of the subsidiary's net assets
FVA, 1/1/2021 Useful life Depreciation
Equipment 26,000 4 years 6,500
Totals 26,000 6,500
January 1, 2021 December 31, 2021 Net Change
Net assets at carrying amount 47,000 109,000
Fair value adjustments 43,000 19,500
Net assets at fair value 90,000 128,500 38,500
Step 2: Goodwill computation
Consideration transferred
Less: Parent's proportionate share in the net assets of the subsidiary (90,000 x 80%)
Goodwill attributable to the owners of the parent
Fair value of NCI
Less: NCI's proportionate share in the net assets of the subsidiary (90,000 x 20%)
Goodwill attributable to NCI
Goodwill - Dec. 31, 2021 (18,000+2,000)
Step 3: Non-controlling interest in net assets
Subsidiary's net assets at fair value, Dec. 31, 2021
Multiply by: NCI percentage
Total
Add: Goodwill attributable to NCI
Non-controlling interest in net assets, Dec. 31, 2021
Step 4: Consolidated retained earnings
Parent's retained earnings, Dec. 31, 2021
Parent's share in net change in subsidiary's net assets (38,500 x 80%)
Consolidated retained earnings, Dec. 31, 2021
Step 5: Consolidated profit or loss
Profits of Sweet and Solace (300,000 + 130,000) 430,000
Depreciation of FVA 6,500
Consolidated profit 423,500
The consolidated profit is attributed to the owners of the parent and NCI as follows:
Sweet Solace
Parent's profit before FVA 300,000 N/A
Subsidiary's profit before FVA 104,000 26,000
Depreciation 5,200 1,300
Totals 398,800 24,700 (12)
Depreciation (6,500 x 80% = 5,200 share of Sweet); (6,500 x 20% = 1,300 share of Solace)
Subsidiary's profit before FVA (130,000 x 80% = 104,000 share of Sweet); (130,000 x 20% = 26,000 share of Solac
Sweet Group
Consolidated Statement of Financial Position
As of December 31, 2021
ASSETS
Cash (278,000 + 54,000) 332,000
Investment in subsidiary (eliminated) -
Equipment (165,000 + 90,000 + 19,500) 274,500
Goodwill (step 2) 20,000
TOTAL ASSETS 626,500 (13)
LIABILITIES AND EQUITY
Trade and other payables (245,000 + 35,000) 280,000
TOTAL LIABILITIES 280,000
Share capital (parent only) 134,000
Retained earnings (parent only, step 4) 184,800
Owners of Parent 318,800
Non-controlling interest (Step 3) 27,700
TOTAL EQUITY 346,500
TOTAL LIABILITIES AND EQUITY 626,500
Depreciation FVA, 12/31/2021
6,500 19,500
6,500 19,500
Net Change
38,500
90,000
72,000
18,000
20,000
18,000
2,000
20,000 (10)
128,500
20%
25,700
2,000
27,700 (11)
154,000
30,800
184,800
Consolidated
300,000
130,000
6,500
423,500
hare of Solace)
130,000 x 20% = 26,000 share of Solace)
(13)
Building, book value 300,000
Increase in fair value (400,000 - 300,000) 100,000
Less: Amortization of allocated excess (P100,000/20 x 3 years) 15,000
Consolidated building, Dec. 31, 2023 385,000
Patent fair value at January 1, 2021 63,000
Less: Amortization for 2 years (63,000/10 x 2 years) 12,600
Consolidated building, Dec. 31, 2022 50,400
