Department of Accounting FEUI

Tutorial of Advanced Financial Accounting1

Post Mid Term Quiz
1. Problem 1
PT Margapala purchased 60% of PT Megas common stock on January 2, 2008 for Rp 300,000,000.
At that date, the noncontrolling interest had a fair value of Rp 200,000,000 and PT Mega reported common
stock, APIC, and retained earnings of Rp 300,000,000, Rp 50,000,000 and 150,000,000 respectively.
PT Margapala and PT Mega regularly purchase inventory from each other. During 2008, PT Mega
sold inventory costing Rp 30,000,000 to PT Margapala for Rp 40,000,000 and PT Margapala resold 60% of
the inventory in 2008 and 40% in 2009. Also in 2008, PT Margapala sold inventory costing Rp 20,000,000
to PT Mega for Rp 25,000,000. PT Mega resold 70% of the inventory in 2008 and 70% in 2009.
On January 2, 2009, PT Margapala sold equipement to PT Mega for Rp 55,000,000. PT Margapala
had purchased the equipment for Rp 100,000,000 on January 1, 2004. It was depreciated on a straight line
basis with an expected life of 8 years and no anticipated scrap value. The equipment total expected life is
unchanges as a result of the intercompany transfer.
PT Megas net income for 2008 and 2009 amounted to Rp 75,000,000 and Rp 90,000,000
respectively. PT Mega declared dividend amounted to Rp 30,000,000 in 2009. No dividend declared in
2008.PT Margapala used basic equity method to account its investment in PT Mega.
a. Prepare all eliminating entries (include basic eliminating entries) required to prepare consolidated
financial statement for the year ended December 31,2009.
b. If PT Margapala separate income (exclude income from investment in PT Mega) for 2009 is Rp
150,000,000. Compute the consolidated net income for the year 2009.

2. Problem 2
PT Paiman purchased 70% ownership of PT Atuna on January 1, 2011 at underlyin book value. AT
that date, the fair value of NCI was equal 30% of PT Atunas book value.
On December 31, 2006, PT Atuna sold Rp 800 million par value 14% 8 years bonds at 101. At that
date, PT Paiman purchased Rp 600 million par value of the bonds directly from PT Atuna and the remainder
is purchased by non-affiliates. The bonds pay interest annually on December 31.
On January 1, 2006, PT Atuna issued Rp 1 billion par value of 8% bonds at 96. The bonds mature in
5 years and pay interest semiannually on January 1 and July 1. On January 1, 2007, PT Paiman purchased
Rp 200 million par value of PT Atunas bonds from non-affiliates at 98.
Assume both companies use straight line method to amortize premium or discount.
a. Prepare eliminating entries at December 31, 2008 to remove the effects of intercompany transfer of
bonds.
b. Present the computation of gain or loss on constructive retirement and the computation of the
balance of each account in the eliminating entries.

Department of Accounting FEUI

Tutorial of Advanced Financial Accounting1
Post Mid Term Quiz

3. Problem 3
Emerald Corporation acquired 9,000 shares of the common stock and 1,600 shares of the 8 percent
preferred stock of Pert Company on December 31, 20X4, at underlying book value. At that date, the fair
value of the noncontrolling interest in Perts common stock was equal to 40 percent of the book value of its
common stock. Pert reported the following balance sheet amounts on January 1, 20X5:
Cash $ 30,000

Accounts Payable $ 20,000

Accounts Receivable 70,000

Bonds Payable 100,000

Inventory 120,000

Preferred Stock 200,000

Buildings & Equipment 600,000

Common Stock 150,000

Less: Accumulated Depreciation (150,000) Retained Earnings 200,000

Total Assets $670,000

Total Liabilities & Equities $670,000

Perts preferred stock is $100 par value, and its common stock is $10 par value. The preferred
dividends are cumulative and are two years in arrears on January 1, 20X5. Pert reports net income of
$34,000 for 20X5 and pays no dividends.
a. Record the consolidation elimination entries needed to prepare a consolidated balance sheet on
January 1, 20X5.
b. Assuming that Emerald reported income from its separate operations of $80,000 in 20X5, compute
the amount of consolidated net income and the amount of income to be assigned to the controlling
shareholders in the 20X5 consolidated income statement.

4. Problem 4
On April 1 20X1, PT Parent purchased 80% ownership of PT Subsidiarys common stock for Rp
4,240,000,000.00. PT Subsidiarys equity components as of January 1 are Common Stock as much as Rp
3,000,000,000.00 and Retained Earnings of Rp 2,000,000,000.00. PT Subsidiary paid Rp 500,000,000.00
dividend on May 1. Income statements of both corporations are:
PT Parent

PT Subsidiary
Jan Mar

Apr Dec

Revenues 3,500,000,000.00 600,000,000.00 1,600,000,000.00

Expenses

2,000,000,000.00 300,000,000.00 900,000,000.00

Income

1,500,000,000.00 300,000,000.00 700,000,000.00

a. Prepare consolidation eliminating entries as of December 31, 20X1.

b. Provide consolidated income statement.

Department of Accounting FEUI

Tutorial of Advanced Financial Accounting1
Post Mid Term Quiz

5. Problem 5
On 2nd January 2011, Parent Co., Japanese company acquired 80% shares of PT Subsidiary,
Indonesian company, for IDR 5.022.200.000,-. Functional currency of PT Subsidiary is Rupiah. PT
Subsidiarys trial balance as of 31st December 2011 and exchange rates along 2011 (IDR/1 JPY) are:
Cash

540,000,000

Sales

1,470,750,000

Account Receivable 756,000,000

COGS

885,937,500

Inventory

1,935,000,000

Operating Expenses 248,062,500

Plant & Equipment

3,735,000,000

Depreciation Expense 31,387,500

Account Payable

729,000,000

Income tax exp

15,187,500

Capital Stock

3,480,000,000

Dividend

32,175,000

Retained Earning

2,499,000,000

FX Rate
2nd January

122

1st September 130

31st December 132
Avarege

127

a. Determine whether financial statements should be prepared using translation of re-measurement

method!
b. Provide the required worksheet!
c. Provide statement of proof for translation or re-measurement!