CHAPTER 16
MULTIPLE CHOICE
16-1:d, because no impairment of goodwill is recognized.
16-2:d, consolidated net income will decrease due to amortization of the allocated difference
which is not the goodwill (P60,000 / 10 years).
16-3:d, computed as follows:
Subsidiary’s net incomeP150,000
Amortization of the allocated difference( 20,000)
Minority interest in net income of subsidiaryP130,000
16-4:c
Acquisition cost (P500,000 + P40,000)P540,000
Less:Book value of interest acquired480,000
Difference P60,000
Cost MethodEquity Method
Acquisition costP540,000P540,000
Parent’s share of subsidiary’s net income-120,000
Dividends received from subsidiary-(48,000)
Amortization of allocated difference (P60,000/20)-(3,000)
Investment account balance, Dec. 31, 2008P540,000P609,000
16-5:a
Net assets of Sol, January 2, 2008P300,000
Increase in earnings:
Net incomeP160,000
Dividends paid (P60,000 / 75%)80,00080,000
Net assets of Sol, Dec. 31, 2008P380,000
Minority interest in net assets of subsidiary (P380,000 x 25%)P95,000
16-6:a
Puno’s net income P145,000
Dividend income (P40,000 x 90%)(36,000)
Salas’ net income 120,000
Consolidated net incomeP229,000
16-7:d
Peter’s net income from own operationP1,000,000
Peter’s share of Seller’s net income 200,000
MINIS (P200,000 x 25%)(50,000)
Consolidated net income attributable to parentP1,150,000
