1. When goodwill is acquired by an investor in an associate, the amortization of goodwill is: A. spread evenly across the useful life of the investment; B. not permitted; C. included in the determination of the investor’s share of the associate’s profit or loss; D. included in the revaluation of the investment.
1. When
A. spread evenly across the useful life of the investment;
B. not permitted;
C. included in the determination of the investor’s share of the associate’s profit or loss;
D. included in the revaluation of the investment.
2. Ginowan Limited acquired a percentage of shares in Juliano Limited for P18 000. Gunawan Limited has no other investments. At the date on which it became an associate, Juliano Limited had the following equity:
- Share capital P50 000
Retained earnings P40 000
At the end of the financial year following the investment, Juliano Limited generated a profit of P6 000. After applying the equity method of accounting, Gunawan Limited will have the following carrying amount for the investment:
A. P19 200
B. P18 000
C. P16 800
D. P9 200.
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