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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
BUSINESS COMBINATION
Answer it with solution:
Transcribed Image Text:43. 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.
Transcribed Image Text:The following information is available as of that date:
The fair value of net identifiable assets of Son Co. is
P800,000.
Ideal Inc. uses the proportionate share of the acquiree's
net identifiable assets to measure the non-controlling
interest.
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 in
subsidiary account for P560,000.
d.
The investment in associate shall be credited for P200,000.
e. All of the above.
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