Choox Tv (CT) Company acquired 40% interest in an associate, Team Payaman (TP) Company, for P5,000,000 on January 1,2020. At the acquisition date, there were no differences between the fair value and carrying amount of identifiable assets and liabilities. TP Company reported the following net income and dividend for 2020 and 2021. 2020 2021 Net Income 2,000,000 3,000,000 Dividend Paid 800,000 1,000,000 The following transactions occurred between CT Company and TP Company: On January 1, 2020, TP Company sold an equipment costing P500,000 to CT company for P800,000. CT Company applied a 10% straight line method. On July 1, 2021, TP Company sold an equipment for P900,000 to CT Company. The carrying amount of the equipment is P500,000 at the time of sale. The remaining life of the equipment is 5 years and CT Company used the straight line depreciation. On December 1, 2021, TP Company sold an inventory to CT Company for P2,800,000. The inventory had a cost of P2,000,000 and was still on hand on December 31, 2021. Requirement: a. What is the investor’s share in the profit of the associate for 2020 and 2021? b. What is the carrying amount of the investment in associate on December 31, 2020 and December 31, 2021?
Choox Tv (CT) Company acquired 40% interest in an associate, Team Payaman (TP)
Company, for P5,000,000 on January 1,2020.
At the acquisition date, there were no differences between the fair value and carrying
amount of identifiable assets and liabilities.
TP Company reported the following net income and dividend for 2020 and 2021.
2020 2021
Net Income 2,000,000 3,000,000
Dividend Paid 800,000 1,000,000
The following transactions occurred between CT Company and TP Company:
On January 1, 2020, TP Company sold an equipment costing P500,000 to CT company for
P800,000. CT Company applied a 10%
On July 1, 2021, TP Company sold an equipment for P900,000 to CT Company. The
carrying amount of the equipment is P500,000 at the time of sale.
The remaining life of the equipment is 5 years and CT Company used the straight line
On December 1, 2021, TP Company sold an inventory to CT Company for P2,800,000.
The inventory had a cost of P2,000,000 and was still on hand on December 31, 2021.
Requirement:
a. What is the investor’s share in the profit of the associate for 2020 and 2021?
b. What is the carrying amount of the investment in associate on December 31, 2020
and December 31, 2021?
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