ABC and XYZ (the parties) entered into an agreement to establish a separate vehicle(DEF) and share joint control over the separate vehicle. The assets and liabilities ofDEF are considered as assets and liabilities of DEF and not the assets and liabilitiesof ABC and XYZ.Upon formation of DEF, DEF issued 70% of its shares equally to ABC and XYZ andthe remaining 30% are issued to other investors.Summary transactions for the first two years of operations of DEF are as follows:20222023Proceeds from issuance of sharesP110,000,000Revenues12,000,000 16,000,000Various costs and operating expenses8,000,000 11,000,000Dividends declared (to be paid in 2024)4,000,0001. How much is the carrying amount of the investment in DEF to be presented inthe books of ABC as of December 31, 2022?2. How much is the investment income for 2022?3. How much is the carrying amount of the investment in DEF to be presented inthe books of ABC as of December 31, 2023?4. How much is the investment income for 2023?

As being provided : DEF = ABC + XYZ + other investors 100% = 35% + 35% + 30% Income = Revenue -…

Answered: ABC and XYZ (the parties) entered into…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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