At the beginning of the current year, Sage Company bought 40% of the Eve Company outstading ordinary shares for P4,000,000. The carrying amount of Eve’s net assets at the purchase date totaled P9,000,000. Fair values and carrying amount were the same for all items except for plant and inventory, for which fair value exceeded their carrying amount by P900,000 and P100,000, respectively. The plant has an 18 years life. All inventory was sold during the current year. During the current year, the investee reported net income of P1,200,000 and paid P200,000 cash dividend. How much is the dividend
At the beginning of the current year, Sage Company bought 40% of the Eve Company outstading ordinary shares for P4,000,000. The carrying amount of Eve’s net assets at the purchase date totaled P9,000,000. Fair values and carrying amount were the same for all items except for plant and inventory, for which fair value exceeded their carrying amount by P900,000 and P100,000, respectively. The plant has an 18 years life. All inventory was sold during the current year. During the current year, the investee reported net income of P1,200,000 and paid P200,000 cash dividend. How much is the dividend
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the beginning of the current year, Sage Company bought 40% of the Eve Company outstading ordinary shares for P4,000,000.
The carrying amount of Eve’s net assets at the purchase date totaled P9,000,000.
Fair values and carrying amount were the same for all items except for plant and inventory, for which fair value exceeded their carrying amount by P900,000 and P100,000, respectively.
The plant has an 18 years life. All inventory was sold during the current year.
During the current year, the investee reported net income of P1,200,000 and paid P200,000 cash dividend.
How much is the dividend income for the current year?
A. 200,000
B. 0
C. 480,000
D. 420,000
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