At the beginning of current year, Cynosure Company purchased 40% of the ordinary shares of another entity for P3,500,000 when the net assets acquired amounted to P7,000,000. At acquisition date, the carrying amounts of the identifiable assets and liabilities of the investee were equal to their fair value, except for equipment for which the fair value was P1,500,000 greater than carrying amount and inventory whose fair value was P500,000 greater than cost. The equipment has a remaining life of 4 years and the inventory was' all sold during the current year. The investee reported net income of P4,000,000 and paid P1,000,000 dividends during the current year. Required:

At the beginning of current year, Cynosure Company purchased 40% of the ordinary shares of another entity for P3,500,000 when the net assets acquired amounted to P7,000,000. At acquisition date, the carrying amounts of the identifiable assets and liabilities of the investee were equal to their fair value, except for equipment for which the fair value was P1,500,000 greater than carrying amount and inventory whose fair value was P500,000 greater than cost. The equipment has a remaining life of 4 years and the inventory was' all sold during the current year. The investee reported net income of P4,000,000 and paid P1,000,000 dividends during the current year. Required:

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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Subject: accounting