Gerry Company is a subsidiary of Nette Company and its shares are not traded in any capital market. Nette Company produces consolidated financila statements for the group and complies with the PFRS. On January 1, 2020, Gerry Company acquired 100,000 ordinary shares of Nette Company for P6,000,000. At the date of purchase, Nette had 500,000 outstanding ordinary shares and shareholders' equity of P20,000,000. During the year 2020, Nette reported profit of P1,000,000 and declared and paid cash dividends of P1.50 per share. The fair value of Nette's share at December 31, 2020 was P68. What amount shall Gerry Company recognize in profit or loss for the year 2020 if it designated the investment as at fair value through profit or loss? A P150,000 B) P200,000 P350,000 D) P950,000

Gerry Company is a subsidiary of Nette Company and its shares are not traded in any capital market. Nette Company produces consolidated financila statements for the group and complies with the PFRS. On January 1, 2020, Gerry Company acquired 100,000 ordinary shares of Nette Company for P6,000,000. At the date of purchase, Nette had 500,000 outstanding ordinary shares and shareholders' equity of P20,000,000. During the year 2020, Nette reported profit of P1,000,000 and declared and paid cash dividends of P1.50 per share. The fair value of Nette's share at December 31, 2020 was P68. What amount shall Gerry Company recognize in profit or loss for the year 2020 if it designated the investment as at fair value through profit or loss? A P150,000 B) P200,000 P350,000 D) P950,000

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

Gerry Company is a subsidiary of Nette Company and its shares are not traded in any capital market. Nette Company
produces consolidated financila statements for the group and complies with the PFRS.
On January 1, 2020, Gerry Company acquired 100,000 ordinary shares of Nette Company for P6,000,000. At the date of
purchase, Nette had 500,000 outstanding ordinary shares and shareholders' equity of P20,000,000. During the year 2020,
Nette reported profit of P1,000,000 and declared and paid cash dividends of P1.50 per share. The fair value of
Nette's share at December 31, 2020 was P68.
What amount shall Gerry Company recognize in profit or loss for the year 2020 if it designated the investment as at fair
value through profit or loss?
A P150,000
B P200,000
(c) P350,000
(D) P950,000

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