BUSINESS COMBINATIONAnswer it with solution: 43. On January 3, 2022, Ideal Inc. purchased 87,500 shares representing35% interest in Son Company's 250,000 ordinary shares for P161,500.Ideal accounts for the investment under the equity method.On December 31, 2022, Son has a net income of P120,000 and paiddividends of P10,000. to its shareholders. On April 1, 2023, SonCompany re-acquired its own 125,000 shares, giving Ideal Inc. controlover Son Company. The following information is available as of that date:The fair value of net identifiable assets of Son Co. isP800,000.Ideal Inc. uses the proportionate share of the acquiree'snet identifiable assets to measure the non-controllinginterest.Which of the following statements is/are INCORRECT?a. The total goodwill from combination is zero.b.The gain on re-measurement is P240,000.c.The parent company (Ideal Inc.) shall debit investment insubsidiary account for P560,000.d.The investment in associate shall be credited for P200,000.e. All of the above.

3. On January 3, 2022, Ideal Inc. purchased 87,500 shares representing 35% interest in Son Company's 250,000 ordinary shares for P161,500. Ideal accounts for the investment under the equity method. On December 31, 2022, Son has a net income of P120,000 and paid dividends of P10,000. to its shareholders. On April 1, 2023, Son Company re-acquired its own 125,000 shares, giving Ideal Inc. control over Son Company.

3. On January 3, 2022, Ideal Inc. purchased 87,500 shares representing 35% interest in Son Company's 250,000 ordinary shares for P161,500. Ideal accounts for the investment under the equity method. On December 31, 2022, Son has a net income of P120,000 and paid dividends of P10,000. to its shareholders. On April 1, 2023, Son Company re-acquired its own 125,000 shares, giving Ideal Inc. control over Son Company.

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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