At the beginning of the current year, Lemon Company purchased 40% of the outstanding ordinary shares of an investee paying ₱2,560, 000 when the carrying amount of the net assets of the investee equaled ₱5,000,000. The difference was attributed to building which had a carrying amount of ₱1,000,000 and a fair market value of ₱1,600,000, and to machinery with a carrying amount of ₱1,200,000 and fair market value of ₱2,000,000. The remaining useful life of the machinery and building was 4 years and 12 years, respectively. During the current year, the investee reported net loss of ₱1,600,000 and paid dividends of ₱1,000,000. What is the carrying amount of the investment in associate at year end?
At the beginning of the current year, Lemon Company purchased 40% of the outstanding ordinary shares of an investee paying ₱2,560, 000 when the carrying amount of the net assets of the investee equaled ₱5,000,000. The difference was attributed to building which had a carrying amount of ₱1,000,000 and a fair market value of ₱1,600,000, and to machinery with a carrying amount of ₱1,200,000 and fair market value of ₱2,000,000. The remaining useful life of the machinery and building was 4 years and 12 years, respectively. During the current year, the investee reported net loss of ₱1,600,000 and paid dividends of ₱1,000,000. What is the carrying amount of the investment in associate at year end?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the beginning of the current year, Lemon Company purchased 40% of the outstanding ordinary shares of an investee paying ₱2,560, 000 when the carrying amount of the net assets of the investee equaled ₱5,000,000. The difference was attributed to building which had a carrying amount of ₱1,000,000 and a fair market value of ₱1,600,000, and to machinery with a carrying amount of ₱1,200,000 and fair market value of ₱2,000,000. The remaining useful life of the machinery and building was 4 years and 12 years, respectively. During the current year, the investee reported net loss of ₱1,600,000 and paid dividends of ₱1,000,000. What is the carrying amount of the investment in associate at year end?
A. ₱1,420,000
B. ₱ 1,270,000
C. ₱ 2,700,000
D. ₱ 2,550,000
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