At the beginning of the current year, Occidental Company purchased 40% of the outstanding ordinary shares of Manapla Company for ₱3,500,000 when the net assets of Manapla amounted to ₱7,000,000. At acquisition date, the carrying amount of the identifiable assets and liabilities of Manapla were equal to their fair value, except for equipment for which the fair value was ₱1,500,000 greater than carrying amount and inventory whose fair value was ₱500,000 greater than cost. The equipment has a remaining life of 4 years and the inventory was all sold during the current year. Manapla Company reported net income of ₱4,000,000 and paid no dividends during the year. What is the maximum amount of the “equity in earnings of the investee”. a. 1,350,000 b. 1,250,000 c. 1,600,000 d. 1,700,000 What is the solution for the option A?
At the beginning of the current year, Occidental Company purchased 40% of the outstanding ordinary shares of Manapla Company for ₱3,500,000 when the net assets of Manapla amounted to ₱7,000,000. At acquisition date, the carrying amount of the identifiable assets and liabilities of Manapla were equal to their fair value, except for equipment for which the fair value was ₱1,500,000 greater than carrying amount and inventory whose fair value was ₱500,000 greater than cost. The equipment has a remaining life of 4 years and the inventory was all sold during the current year. Manapla Company reported net income of ₱4,000,000 and paid no dividends during the year. What is the maximum amount of the “equity in earnings of the investee”. a. 1,350,000 b. 1,250,000 c. 1,600,000 d. 1,700,000 What is the solution for the option A?
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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At the beginning of the current year, Occidental Company purchased 40% of the outstanding ordinary shares of Manapla Company for ₱3,500,000 when the net assets of Manapla amounted to ₱7,000,000.
At acquisition date, the carrying amount of the identifiable assets and liabilities of Manapla were equal to their fair value, except for equipment for which the fair value was ₱1,500,000 greater than carrying amount and inventory whose fair value was ₱500,000 greater than cost.
The equipment has a remaining life of 4 years and the inventory was all sold during the current year.
Manapla Company reported net income of ₱4,000,000 and paid no dividends during the year.
What is the maximum amount of the “equity in earnings of the investee”.
a. 1,350,000
b. 1,250,000
c. 1,600,000
d. 1,700,000
What is the solution for the option A?
Transcribed Image Text:Problem 38-12 (IAA)
At the beginning of the current year, Occidental Company purchased 40% of the outstanding ordinary
shares of Manapla Company for P3,500,000 when the net assets of Manapla amounted to P7,000,000.
At acquisition date, the carrying amount of the identifiable assets and liabilities of Manapla 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.
Manapla Company reported net income of P4,000,000 and paid no dividends during the year.
What is the maximum amount of the "equity in earnings of the investee"?
а. 1,350,000
b. 1,250,000
с. 1,600,000
d. 1,700,000
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