At the beginning of current year, Sage Company bought 40% of Eve Company’s outstanding ordinary shares for ₱4,000,000. The carrying amount of Eve’s net assets at the purchase date totaled ₱9,000,000. Fair values and carrying amounts were the same for all items except for plant and inventory, for which fair values exceeded their carrying amounts by ₱900,000 and ₱100,000, respectively. The plant has an 18-year life. All inventory was sold during the current year. During the current year, the investee reported net income of ₱1,200,000 and paid a ₱200,000 cash dividend. What amount should be reported as investment income for the current year? a. 480,000 b. 420,000 c. 360,000 d. 320,000
At the beginning of current year, Sage Company bought 40% of Eve Company’s outstanding ordinary shares for ₱4,000,000. The carrying amount of Eve’s net assets at the purchase date totaled ₱9,000,000. Fair values and carrying amounts were the same for all items except for plant and inventory, for which fair values exceeded their carrying amounts by ₱900,000 and ₱100,000, respectively. The plant has an 18-year life. All inventory was sold during the current year. During the current year, the investee reported net income of ₱1,200,000 and paid a ₱200,000 cash dividend. What amount should be reported as investment income for the current year? a. 480,000 b. 420,000 c. 360,000 d. 320,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
At the beginning of current year, Sage Company bought 40% of Eve Company’s outstanding ordinary shares for ₱4,000,000.
The carrying amount of Eve’s net assets at the purchase date totaled ₱9,000,000.
Fair values and carrying amounts were the same for all items except for plant and inventory, for which fair values exceeded their carrying amounts by ₱900,000 and ₱100,000, respectively. The plant has an 18-year life. All inventory was sold during the current year.
During the current year, the investee reported net income of ₱1,200,000 and paid a ₱200,000 cash dividend.
What amount should be reported as investment income for the current year?
a. 480,000
b. 420,000
c. 360,000
d. 320,000
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 5 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education