d. 225,000percent of theon for P516,000b. 500,000quityshares of Ritz Co. Art for the has a 48Chapter 14Investmcarrying amount of P1,300,000 on January 1, 20x1, under theequity method. On September 1, 20x1, Art sells 75% of theinvestment at P140 per share - the fair value on this date. Artincurs transaction costs of P120,000 an the sale. Ritz reportsprofit of P4,200,000 for the year and declares cash dividends ofP1,200,000 on December 31, 20x1. The profit is earned evenlyduring theDecember 31, 20x1. How much is the net effect of theinvestment in Art Co.'s profit or loss in 20x1?a. 2,092,500Dac10year.Ritz's shares are selling at P130pershare onb. 2,289,500c. 2,356,500d. 2,420,500

Investment in equity securities is the current or non-current investment made by the firm in the…

Answered: 10. Art Co. owns 25,000 out of the…

10. Art Co. owns 25,000 out of the 100,000 outstanding voting shares of Ritz Co. Art accounts for the investment, which has a

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

d. 225,000
percent of the
on for P516,000
b. 500,000
quity
shares of Ritz Co. Art for the has a

48
Chapter 14
Investm
carrying amount of P1,300,000 on January 1, 20x1, under the
equity method. On September 1, 20x1, Art sells 75% of the
investment at P140 per share - the fair value on this date. Art
incurs transaction costs of P120,000 an the sale. Ritz reports
profit of P4,200,000 for the year and declares cash dividends of
P1,200,000 on December 31, 20x1. The profit is earned evenly
during the
December 31, 20x1. How much is the net effect of the
investment in Art Co.'s profit or loss in 20x1?
a. 2,092,500
D
ac
10
year.
Ritz's shares are selling at P130
per
share on
b. 2,289,500
c. 2,356,500
d. 2,420,500

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