PETER Corporation owns 75% of the outstanding stocks of SISA Company when the
book values are equal to fair values, thus no goodwill, no excess at the date of
acquisition.
Selected information from separate accounts of both entities for 2020 and 2021
follow:
PETER Corporation SISA Company
2020 2021 2020 2021
Sales P 800,000 P 900,000 P 400,000 P 500,000
Cost of goods sold 480,000 540,000 248,000 310,000
Operating expenses. 80,000 90,000 40,000 45,000
Ending Inventories. 120,000 180,000 80,000 100,000
● In 2020, SISA Company sold merchandise to PETER Corp. for P50,000 SP at
a profit of P16,000. 30% of these merchandise remained at the account balance
of PETER Corp. at the end of 2020. In the same year, PETER Corp. sold its
own merchandise costing P50,000 to SISA Comp. at a gross profit of 20%.
P15,000 at cost remained in the ending inventories of SISA Comp. at the end
of 2020.
● In 2021, SISA Comp. sold merchandise again to PETER Corp. for P60,000 at a
profit of P19,200. P20,000 of these merchandise at billed price remained in
the inventories balance of PETER Corp. at the end of 2021. At the same time,
PETER Corp. sold merchandise for P85,000 to SISA Comp. at a gross profit of
15%. P15,000 worth of merchandise at billed price remained in the ending
inventories of SISA Comp. at the end of 2021.
● There were no dividends declared, or revenues recorded by PETER nor SISA
Co. during 2020-2021
REQUIRED: Compute for the following items for 2020 and 2021:
2020 2021
1. Consolidated sales 1,087,500 1,255,000
2. Consolidated cost of goods sold 624,050 705,100
3. Consolidated net income 343,450 414,900
4. Non-controlling interest in the net income 26,800 35,850
of SISA Comp (NCINIS)
5. Consolidated ending inventories 191,450 271,350
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SOLUTIONS:
WORKING PAPER ELIMINATING ENTRIES FOR 2020:
WPEE 1: SALES 50,000.00
COGS 50,000.00
SALES 62,500.00
COGS 62,500.00
WPEE 2: COGS 4,800.00
MI,END 4,800.00
WPEE 3: COGS 3,750.00
MI,END 3,750.00
WPEE 4: NCINIS 26,800.00
NCINAS 26,800.00
CONSOLIDATED INCOME STATEMENT 2020
PARENT SUBSIDIARY ELIMINATION CONSOLIDATED
SALES 800,000.00 400,000.00 -50000-62500 1,087,500.00
50000+62500-
COGS (480,000.00) (248,000.00) 4800-3750 (624,050.00)
GROSS PROFIT 320,000.00 152,000.00 463,450.00
OPEX (80,000.00) (40,000.00) (120,000.00)
NET INCOME 240,000.00 112,000.00 343,450.00
ALLOCATION OF CONSOLIDATED NET INCOME 2020
PNI-OWN 240,000.00
DS-UGP-EI (3,750.00) CI% NCI%
PNI-OWN-ADJ 236,250.00 236,250.00
SNI-2020 112,000.00
US-UGP-EI (4,800.00)
SNI-ADJ-2020 107,200.00 80,400.00 26,800.00
CONSO NI 343,450.00 316,650.00 26,800.00
CONSOLIDATED ENDING INVENTORIES
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ENDING INV-P 120,000.00
ENDING INV-S 80,000.00
UGP-EI (8,550.00)
CONSO END INV 191,450.00
WORKING ELIMINATING ENTRIES FOR PAPER 2021:
SALES 60,000.00
WPEE 5: COGS 60,000.00
SALES 85,000.00
WPEE 6: COGS 85,000.00
RE-P 3,600.00
WPEE 7: NCI 1,200.00
COGS 4,800.00
RE-P 3,750.00
WPEE 8: COGS 3,750.00
COGS 6,400.00
WPEE 9: MI,END 6,400.00
COGS 2,250.00
WPEE 10: MI,END 2,250.00
NCI-I/S 35,850.00
WPEE 11: NCI-B/S 35,850.00
CONSOLIDATED INCOME STATEMENT 2021
SUBSIDIAR
PARENT Y ELIMINATION CONSO.
1,255,000.0
SALES 900,000.00 500,000.00 -60,000,-85,000 0
60000+85000+4800+3750-
COGS (540,000.00) (310,000.00) 6400-2250 (705,100.00)
GROSS PROFIT 360,000.00 190,000.00 549,900.00
OPEX (90,000.00) (45,000.00) (135,000.00)
NET INCOME 270,000.00 145,000.00 414,900.00
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ALLOCATION OF CONSOLIDATED NET INCOME 2020
PNI-OWN 270,000.00
DS-RGP-BI 3,750.00
DS-UGP-EI (2,250.00) CI% NCI%
PNI-OWN-ADJ 271,500.00 271,500.00
SNI-2021 145,000.00
US-RGP-BI 4,800.00
US-UGP-EI (6,400.00)
SNI-ADJ-2020 143,400.00 107,550.00 35,850.00
CONSO NI 414,900.00 379,050.00 35,850.00
CONSOLIDATED ENDING INVENTORIES
ENDING INV-P 180,000.00
ENDING INV-S 100,000.00
UGP-EI (8,650.00)
CONSO END INV 271,350.00
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