How much is the investment income for the current year? acquired shares was P4,000,000.earnings of P5,000,000 for the year and paid dividend ofon the investee's board of directors. The iavestee reported30,000 shares of an investee's 200,000 outstanding ordinaryAt the beginning of current year, Disgust Company purchasedshares for P6,000,000. On that date, the carrying amount of theThe entity attributed the excess of cost over carrying amountto patent with remaining useful life of 10 years.quired shares was P4,000,000.ontity attributed the excess of cost over carrying amountyears.year, Disgust Company's officers gained a majorityDuring theDuhe investee's board of directors. The iavestee reportedP3,000,000 at year-end.Required:Prenare iournal entries to wnd

Investment income refers to the income earned by a person or business entity on the investments made…

At the beginning of current year, Disgust Company purchased 30,000 shares of an investee's 200,000 outstanding ordinary shares for P6,000,000. On that date, the carrying amount of the quired shares was P4,000,000. The entity attributed the excess of cost over carrying amount to patent with remaining useful life of 10 years. During the year, Disgust Company's officers gained a majority investee's board of directors. The iavestee reported earnings of P5,000,000 for the year and paid dividend of P3,000,000 at year-end. Required: Pronare iournal entriee to wonn 11

At the beginning of current year, Disgust Company purchased 30,000 shares of an investee's 200,000 outstanding ordinary shares for P6,000,000. On that date, the carrying amount of the quired shares was P4,000,000. The entity attributed the excess of cost over carrying amount to patent with remaining useful life of 10 years. During the year, Disgust Company's officers gained a majority investee's board of directors. The iavestee reported earnings of P5,000,000 for the year and paid dividend of P3,000,000 at year-end. Required: Pronare iournal entriee to wonn 11

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2022 an SME acquired 25% of the equity of each of entities A and B for P1,000,000 and P3,000,000 respectively. Transaction costs of 10% of the purchase price of the shares were incurred by SME. On January 2, 2022, entity A declared and paid dividend of P800,000. For the year ended December 31, 2022, entity A recognized profit of P1,000,000. However, entity B recognized a loss of P2,000,000 for that year. Published price quotations do not exist for the shares of entities A and B. Using appropriate valuation techniques, SME determined the fair value of the investments in entities A and B on December 31, 2022 at P1,500,000 and P2,000,000 respectively. Cost of disposal are estimated at 10% of the fair value of the investment. 33. 34. 35. Under the fair value model, what is the total carrying amount of the investment in associates on December 31, 2022? *
M.T. Glass, Inc. purchased the following investments onJanuary 1, 2028:1. 21,000 shares (representing 42%) of AA Company stockfor $546,0002. 18,000 shares (representing 9%) of ZZ Company stockfor $306,000AA Company and ZZ Company reported the following informationfor the years 2028 and 2029:2028: AA Company ZZ CompanyNet income $140,000 $225,000Total dividends paid $ 78,000 $ 53,000Market value at Dec 31 $33 per share $22 per share2029: AA Company ZZ CompanyNet income $210,000 $280,000Total dividends paid $ 90,000 $125,000Market value at Dec 31 $35 per share $23 per shareCalculate the total investments shown in M.T. Glass, Inc.'sDecember 31, 2028 balance sheet (i.e., the balance in theInvestment in AA Company plus the balance in the Investmentin ZZ Company).
How much is the investment income to be reported at the end of the current year? At the beginning of current year, Courage Company acquired 25% of the outstanding shares of an investee at a total cost of P8,400, 000. At the time, the carrying amount of the net assets of Courage Company totaled P28, 800, 000. The investee owned equipment with 5-year remaining life and with a fair value P2, 400, 000 more than carrying amount. The investee owned land with a fair value of Pl, 200, 000 more than carrying amount. During the current year, the investee sold the land. At year-end, the investee reported net income of P6, 000, 000 declared and paid a cash dividend of P3, 600, 000 to shareholders at year-end. The fair value of the investment at year-end is P9, 000, 000. Q1. How much is the investment income to be reported at the end of the current year? Q2. How much is the carrying amount of the investment at year- end? Q3. How much is the implied goodwill from acquisition? Q4. What is the entry…
M.T. Glass, Inc. purchased the following investments onJanuary 1, 2028:1. 21,000 shares (representing 42%) of AA Company stockfor $546,0002. 18,000 shares (representing 9%) of ZZ Company stockfor $306,000AA Company and ZZ Company reported the following informationfor the years 2028 and 2029:2028: AA Company ZZ CompanyNet income $140,000 $225,000Total dividends paid $ 78,000 $ 53,000Market value at Dec 31 $33 per share $22 per share2029: AA Company ZZ CompanyNet income $210,000 $280,000Total dividends paid $ 90,000 $125,000Market value at Dec 31 $35 per share $23 per shareCalculate the amount of dividend revenue shown in M.T. Glass,Inc.'s 2029 income statement for these two investments.
At the beginning of current year, Disgust Company purchased shares for P6,000,000. On that date, the carrying amount of the 30,000 shares of an investee's 200,000 outstanding ordinary acquired shares was P4,000,000. Problem 17-4 (IAA) u the beginning of current year, Disgust Company purchased A 000 shares of an investee's 200,000 outstanding ordinary acquired shares was P4,000,000. The entity attributed the excess of cost over carrying amount to patent with remaining useful life of 10 years. During the year, Disgust Company's officers gained a majority on the investee's board of directors. The investee reported earnings of P5,000,000 for the year and paid dividend of P3,000,000 at year-end. Required: 1. Prepare journal entries to record the transactions for the curient year. 2. Compute the investment income for the current year. 3. Compute the carrying amount of the investment at year-end. Problem 17-5 (IAA) Alpha Company acquired 20,000 shares of Beta Company on January 1, 2020 at…
The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares eachvalued at $1.50. The summary statement of the financial position of the subsidiary company immediatelyfollowing the acquisition is:Fair value of assets acquired $2,640,000Fair value of liabilities acquired $720,000Total shareholders’ equity of the subsidiary company $800,000Retained earnings of the subsidiary company $1,120,000Required:(b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company (d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50.
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The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares eachvalued at $1.50. The summary statement of the financial position of the subsidiary company immediatelyfollowing the acquisition is:Fair value of assets acquired $2,640,000Fair value of liabilities acquired $720,000Total shareholders’ equity of the subsidiary company $800,000Retained earnings of the subsidiary company $1,120,000Required:(a) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company (b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50
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At the beginning of the current year, an entity acquired 40% of the ordinary shares of an associate. On such date, assets and liabilities of the investee were recorded at fair value and the acquisition showed that goodwill of P1,000,000 was acquired. The investee reported net income of P8,000,000 for the current year. In December, the investee sold inventory costing P3,000,000 to the investor for P5,000,000. The inventory remained unsold by the investor at year-end. At the beginning of the current year, the investee sold equipment to the investor with a carrying amount of P2,500,000 for P4,000,000. The remaining life of the equipment is 5 years. What amount of investment income should be reported for the current year? a. 1,920,000 b. 1,800,000 c. 3,200,000 d. 2,400,000 Problem 4 An entity owned 100% of another entity’s preference shares and 20% of ordinary shares. The investee’s share capital outstanding at year-end included P5,000,000 of 10% cumulative preference…
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