The following transactions occurred between Glorious Company and Alta Company: On January 1,2014, Alta Company sold an equipment costing P500,000 to Glorious Company for P800,000. Glorious Company applied a 10% straight line depreciation
Glorious Company acquired 40% interest in an associate, Alta Company, for P5,000,000 on January 1,2014. At
the acquisition date, there were no differences between fair value and carrying amount of identifiable assets
and liabilities.
Alta Company reported the following net income and dividend for 2014 and 2015:
2014 2015
Net income 2,000,000 3,000,000
Dividend paid 800,000 1,000,000
The following transactions occurred between Glorious Company and Alta Company:
On January 1,2014, Alta Company sold an equipment costing P500,000 to Glorious Company for P800,000.
Glorious Company applied a 10% straight line
On July 1,2015, Alta Company sold an equipment for P900,000 to Glorious Company. The carrying amount
of the equipment is P500,000 at the time of sale. The remaining life of the equipment is 5 years and Glorious
Company used the straight line depreciation.
On December 1,2015, Alta Company sold an inventory to Glorious Company for P2,800,000.
The inventory had a cost of P2,000,000 and was still on hand on December 31,2015.
Requirements:
1. What is the investor's share in the profit of the associate for 2014?
2. What is the investor's share in the profit of the associate for 2015?
3. What is the carrying amount of the investment in associate on December 31, 2014?
4. What is the carrying amount of the investment in associate on December 31, 2015?
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