Root Co. owns 40% of Crop, Inc.'s ordinary shares. On July 1, 20x2, Root Co. sells half of its investment in Crop shares for P800,000. The adjusted balances of the related accounts immediately before the sale are as follows: Investment in associate P2,400,000 Cumulative share in Crop's revaluation gains 1,000,000 Root retains significant influence over Crop after the sale. How much of the cumulative share in Crop's revaluation gains is derecognized on July 1, 20x2?

Revaluation Gains that are derecognized in July 1, 20x2 is P 400,000.

Please see solution below.

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Step-by-step explanation

Investment in Associate P 2,400,000.00 multiply by % sold 50% Carrying Value Investment to be sold 1,200,000.00 Selling Price (800,000.00) Revaluation Gains to be derecognized P 400,000.00 Revaluation Gains, Unadjusted P 1,000,000.00 To be derecognized (400,000.00) Revaluation Gains, adjusted P 600,000.00 We will adjust the carrying value of the asset to the selling price, thus any decrease shall be charged/derecognized in Revaluation Gains, if available