FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Problem 18-1 (IFRS)
On January 1, 2019, Heaven Company acquired 20% of the ordinary shares of an associate for P6,000,000. On this date, all the identifiable assets and liabilities of the associate were recorded at fair value.
An analysis of the acquisition showed that the
P300,000 was acquired.
The net income and dividend of the associate were as follows
2019 2020
Net income 3,000,000 4,000,000
Dividend paid 1,000,000 1,500,000
In December 2019, the associate sold inventory to Heaven Company for P900,000. The cost of the inventory was P600,000.
This inventory remained unsold by Heaven Company on December 31, 2019. However, it was sold by Heaven Company in 2020.
In December 2020, the associate sold inventory to Heaver. Company for P750,000. The cost of the inventory was P500,000. This inventory remained unsold by Heaven Company on December 31, 2020.
Required:
1. Determine the investor's share in the profit of the associate for 2019.
2. Determine the investor's share in the profit of the associate for 2020.
3. Prepare
4. Determine the carrying amount of the investment in associate on December 31, 2020.
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