question archive problem 1) At the beginning of the current year, Solve Company bought 40% of Tee Company's outstanding ordinary shares for P4,000,000
problem 1) At the beginning of the current year, Solve Company bought 40% of Tee Company's outstanding ordinary shares for P4,000,000
Subject:BusinessPrice: Bought3
problem 1) At the beginning of the current year, Solve Company bought 40% of Tee Company's outstanding ordinary shares for P4,000,000. The carrying amount of Tee's net assets at the purchase date totaled P9,000,000. Fair values and carrying amounts were the same for all items except for plant and inventory, for which fair values exceeded their carrying amounts by P900,000 and totaled P100,000, respectively. The plant has an 18-year life. All inventory was sold during the current year. During the current year, the investee reported net income of P1,200,000 and paid a P200 000 cash dividend. What amount should be reported as investment income for the current year?
problem 2. On January 1, 20x1, Jelly Co. acquired 10,000 shares representing a 10% interest in Bean, Inc. 's 100,000 outstanding shares for P3,200,000. In 20x1, Bean reported profit of P20,000,000 and declared and paid dividends of P4,000,000. The investment was initially classified as investment in held for trading securities. The fair value of the shares on December 31, 20x1 was P340 per share On July 1, 20x2, Jelly Co. acquired additional 15,000 shares of Bean, Inc. at P280 per share (the fair value on this date), resulting to an increase in its ownership interest to 25%. The transaction did not give rise to any goodwill or negative goodwill. In 20x2, Bean reported profit of P24,000,000, of which P16,000,000 were earned in the second half of the year. In addition, Bean declared and paid dividends of P4,000,000 on December 31, 20x2. The Bean shares were quoted at P360 per share on December 31, 20x2. How much is the total amount recognized in profit or loss in 20x2 in relation to the investment?
