1. What is the excess of cost over the carrying amount of the net assets acquired? 2. What amount should be reported as investment income for the current year? 3. What is the carrying amount of the investment in associate at year-end?
1. What is the excess of cost over the carrying amount of the net assets acquired? 2. What amount should be reported as investment income for the current year? 3. What is the carrying amount of the investment in associate at year-end?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 2
At the beginning of the current year, Adam Company bought 40% of Eve Company's outstanding ordinary shares for P4,000,000. The carrying amount of Eve's 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 the fair values exceeded their carrying amounts by P900,000 and 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 P200,000 cash dividend.
Requirements:
1. What is the excess of cost over the carrying amount of the net assets acquired?
2. What amount should be reported as investment income for the current year?
3. What is the carrying amount of the investment in associate at year-end?
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