ABC Company acquired 30,000 shares out of XYZ Company's 100,000 outstanding share on January 1,2020 for P 3,000,000 when the net assets of XYZ was P 10,000,000. This acquisition gave ABC significant influence over XYZ Company. XYZ earned P 1,000,000 net loss and paid dividends of P 300,000 in 2020 On December 31,2020, market value of each XYZ shares is P 120 On October 20,2021, XYZ declared a 2 for 1 share split. For the year 2021, XYZ reported net income of P2,000,000 and declared and paid P5 cash dividend. On December 31,2021, market value of each XYZ shares is P 125. Answer the following: 1. What total amount must be presented in the profit or loss section of ABC Company for the year 2020 related to his investment in XYZ Company? 2. Assuming ABC Company sold all his XYZ investment on December 31, 2021 for P 125 per share, what total amount must be presented in the profit or loss section of ABC Company for the year 2021 related to his investment in XYZ Company? 3. What total amount must be presented in the profit or loss section of ABC Company for the year 2021 related to his investment in XYZ Company? 4.Assuming ABC Company sold all his XYZ investment on December 31, 2021 for P 125 per share, how much is the gain or loss on sale of the investment?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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ABC Company acquired 30,000 shares out of
XYZ Company's 100,000 outstanding share on
January 1,2020 for P 3,000,000 when the net
assets of XYZ was P 10,000,000. This
acquisition gave ABC significant influence over
XYZ Company. XYZ earned P 1,000,000 net
loss and paid dividends of P 300,000 in 2020
On December 31,2020, market value of each
XYZ shares is P 120 On October 20,2021, XYZ
declared a 2 for 1 share split. For the year 2021,
XYZ reported net income of P2,000,000 and
declared and paid P5 cash dividend. On
December 31,2021, market value of each XYZ
shares is P 125. Answer the following: 1. What
total amount must be presented in the profit or
loss section of ABC Company for the year 2020
related to his investment in XYZ Company? 2.
Assuming ABC Company sold all his XYZ
investment on December 31, 2021 for P 125 per
share, what total amount must be presented in
the profit or loss section of ABC Company for
the year 2021 related to his investment in XYZ
Company? 3. What total amount must be
presented in the profit or loss section of ABC
Company for the year 2021 related to his
investment in XYZ Company? 4.Assuming ABC
Company sold all his XYZ investment on
December 31, 2021 for P 125 per share, how
much is the gain or loss on sale of the
investment?
Transcribed Image Text:ABC Company acquired 30,000 shares out of XYZ Company's 100,000 outstanding share on January 1,2020 for P 3,000,000 when the net assets of XYZ was P 10,000,000. This acquisition gave ABC significant influence over XYZ Company. XYZ earned P 1,000,000 net loss and paid dividends of P 300,000 in 2020 On December 31,2020, market value of each XYZ shares is P 120 On October 20,2021, XYZ declared a 2 for 1 share split. For the year 2021, XYZ reported net income of P2,000,000 and declared and paid P5 cash dividend. On December 31,2021, market value of each XYZ shares is P 125. Answer the following: 1. What total amount must be presented in the profit or loss section of ABC Company for the year 2020 related to his investment in XYZ Company? 2. Assuming ABC Company sold all his XYZ investment on December 31, 2021 for P 125 per share, what total amount must be presented in the profit or loss section of ABC Company for the year 2021 related to his investment in XYZ Company? 3. What total amount must be presented in the profit or loss section of ABC Company for the year 2021 related to his investment in XYZ Company? 4.Assuming ABC Company sold all his XYZ investment on December 31, 2021 for P 125 per share, how much is the gain or loss on sale of the investment?
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