On January 1, 2021, Joshtin Company purchased40% of the outstanding ordinary shares of aninvestee paying P2,560,000 when the carryingamount of the net assets of the investee equaledP5,000,000. The difference was attributed toequipment which had a carrying amount ofP1,200,000 and a fair market value ofP2,000,000, and to building with a carryingamount of P1,000,000 and a fair market value ofP1,600,000. The remaining useful life of theequipment and building was 4 years and 12years, respectively. During 2021, the investeereported net income of P1,600,000 and paiddividends of P1,000,000. What is the carryingamount of the investment in associate onDecember 31, 2021? *a. 2,550,000b. 2,700,000c. 2,800,000d. 3,050,000

Given in the question: On January 1, 2021, Joshtin Company has purchased 40% of the outstanding…

Answered: dividends of P1,000,000. What is the…

Business

Accounting

dividends of P1,000,000. What is the carrying amount of the investment in associate on December 31, 2021? *

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On January 1, 2021, Joshtin Company purchased
40% of the outstanding ordinary shares of an
investee paying P2,560,000 when the carrying
amount of the net assets of the investee equaled
P5,000,000. The difference was attributed to
equipment which had a carrying amount of
P1,200,000 and a fair market value of
P2,000,000, and to building with a carrying
amount of P1,000,000 and a fair market value of
P1,600,000. The remaining useful life of the
equipment and building was 4 years and 12
years, respectively. During 2021, the investee
reported net income of P1,600,000 and paid
dividends of P1,000,000. What is the carrying
amount of the investment in associate on
December 31, 2021? *
a. 2,550,000
b. 2,700,000
c. 2,800,000
d. 3,050,000

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