1. What amount should be reported as income before tax in the financial statements? * 1. The financial statements of Kare-Kare Company for the calendar year ending December 31, 2021 are authorized for issue on March 30, 2022. Income before tax was computed at P50,000,000 before the following events occurred in the company: a. The company had investments in shares held for trading which were recorded at the fair value of P600.000 on December 31, 2021. During the period up to March 1.
1. What amount should be reported as income before tax in the financial statements? * 1. The financial statements of Kare-Kare Company for the calendar year ending December 31, 2021 are authorized for issue on March 30, 2022. Income before tax was computed at P50,000,000 before the following events occurred in the company: a. The company had investments in shares held for trading which were recorded at the fair value of P600.000 on December 31, 2021. During the period up to March 1.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 20BEA: The income statement, statement of retained earnings, and balance sheet for Somerville Company are...
Related questions
Question
![1. What amount should be reported as income before tax in the financial
statements? *
1. The financial statements of Kare-Kare Company for the calendar year ending December
31, 2021 are authorized for issue on March 30, 2022. Income before tax was computed
at P50,000,000 before the following events occurred in the company:
a. The company had investments in shares held for trading which were recorded at the
fair value of P600,000 on December 31, 2021. During the period up to March 1,
2022, there was a steady decline in the fair value of all the shares in the portfolio,
and on March 1, 2022, the fair value had fallen to P500,000.
b. A customer owing the company P300,000 filed for bankruptcy on February 2, 2022.
The company included in its financial statements an allowance for doubtful accounts
pertaining to this customer of P100,000.
c. A shipping vessel of the company with a carrying amount of P10,000,000 was
destroyed at sea because of the missile fired by the Russian army which accidentally
hit the vessel on March 5, 2022.
d. A factory machinery with carrying amount of P700,000 was destroyed on December
30, 2021. The company recorded a loss of P200,000 and claims receivable from the
insurance company of P500,000 on December 31, 2021. On February 1, 2022, an
investigation revealed that the machinery was destroyed due to the negligence of
the operator which resulted to the forfeiture of insurance claims.
What amount should be reported as income before tax in the financial statements?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd4071682-32d3-4bee-aa2a-ee0104ec3a00%2F206fc152-d005-4c6a-a29a-3da39948d2f0%2Fsoxy5uo_processed.png&w=3840&q=75)
Transcribed Image Text:1. What amount should be reported as income before tax in the financial
statements? *
1. The financial statements of Kare-Kare Company for the calendar year ending December
31, 2021 are authorized for issue on March 30, 2022. Income before tax was computed
at P50,000,000 before the following events occurred in the company:
a. The company had investments in shares held for trading which were recorded at the
fair value of P600,000 on December 31, 2021. During the period up to March 1,
2022, there was a steady decline in the fair value of all the shares in the portfolio,
and on March 1, 2022, the fair value had fallen to P500,000.
b. A customer owing the company P300,000 filed for bankruptcy on February 2, 2022.
The company included in its financial statements an allowance for doubtful accounts
pertaining to this customer of P100,000.
c. A shipping vessel of the company with a carrying amount of P10,000,000 was
destroyed at sea because of the missile fired by the Russian army which accidentally
hit the vessel on March 5, 2022.
d. A factory machinery with carrying amount of P700,000 was destroyed on December
30, 2021. The company recorded a loss of P200,000 and claims receivable from the
insurance company of P500,000 on December 31, 2021. On February 1, 2022, an
investigation revealed that the machinery was destroyed due to the negligence of
the operator which resulted to the forfeiture of insurance claims.
What amount should be reported as income before tax in the financial statements?
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Managerial Accounting: The Cornerstone of Busines…](https://www.bartleby.com/isbn_cover_images/9781337115773/9781337115773_smallCoverImage.gif)
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
![Managerial Accounting: The Cornerstone of Busines…](https://www.bartleby.com/isbn_cover_images/9781337115773/9781337115773_smallCoverImage.gif)
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning