On Jan. 1, 2020, ABC bought 250,000 shares of XYZ Corporation for P8,000,000. All 1,000,000 P20-par shares of XYZ were issued and outstanding. The net assets were valued at P32,000,000 but they were carried in the accounting books at P30,000,000. The difference is attributable to an equipment that has a useful life of 4 years. Details relating to XYZ for the years 2020 and 2021 are as follows:What is the balance of the Investment in Associate as of Dec. 31, 2021? 20202021TotalP 3,000,000P4,000,000 P 7,000,000Net IncomeGross Profit from Upstream Sales(2020 – 30% remain unsold, 2021 – 40% remain unsoldas of their respective years but sold in the subsequent)200,000100,000P300,000Dividends DeclaredP 2,000,000P 2,500,000 P 6,500,000P 20,000,000 P 20,000,000Share Capital, Ordinary SharesShare Capital, 8% Cumulative,Nonparticipating Preference SharesTotal Share Capital-0-4,000,000P20,000,000P24,000,000

Investments are made by individuals or business entities with a goal of making profits or gains by…

Answered: 2020 2021 Total P 3,000,000 P4,000,000…

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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On Jan. 1, 2020, ABC bought 250,000 shares of XYZ Corporation for P8,000,000. All 1,000,000 P20-par shares of XYZ were issued and outstanding. The net assets were valued at P32,000,000 but they were carried in the accounting books at P30,000,000. The difference is attributable to an equipment that has a useful life of 4 years. Details relating to XYZ for the years 2020 and 2021 are as follows:

What is the balance of the Investment in Associate as of Dec. 31, 2021?

2020
2021
Total
P 3,000,000
P4,000,000 P 7,000,000
Net Income
Gross Profit from Upstream Sales
(2020 – 30% remain unsold, 2021 – 40% remain unsold
as of their respective years but sold in the subsequent)
200,000
100,000
P300,000
Dividends Declared
P 2,000,000
P 2,500,000 P 6,500,000
P 20,000,000 P 20,000,000
Share Capital, Ordinary Shares
Share Capital, 8% Cumulative,
Nonparticipating Preference Shares
Total Share Capital
-0-
4,000,000
P20,000,000
P24,000,000

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