Grat Company acquired 30% of Suth Company's voting share capital for P2,000,000 on January 1, 2017. Grat's 30% interest in Suth gave Grat the ability to exercise significant influence over Suth's operating and financial policies. During2017, Suth earned P800,000 and paid cash dividends of P500,000. Suth reported earnings of P1,000,000 for the six months ended June 30, 2018 and P2,000,000 for the year ended December 31, 2018. On July 1, 2018, Grat sold half of the investment in Suth for P1,500,000 cash. On such date, the investment is measured at fair value through other comprehensive income. The fair value of the retained investment is P1,600,000 on July 1, 2018 and P1,800,000 on December 31, 2018. What amount should be recognized as investment income for 2017 as a result of the investment?
Grat Company acquired 30% of Suth Company's voting share capital for P2,000,000 on January 1, 2017. Grat's 30% interest in Suth gave Grat the ability to exercise significant influence over Suth's operating and financial policies. During2017, Suth earned P800,000 and paid cash dividends of P500,000. Suth reported earnings of P1,000,000 for the six months ended June 30, 2018 and P2,000,000 for the year ended December 31, 2018. On July 1, 2018, Grat sold half of the investment in Suth for P1,500,000 cash. On such date, the investment is measured at fair value through other comprehensive income. The fair value of the retained investment is P1,600,000 on July 1, 2018 and P1,800,000 on December 31, 2018. What amount should be recognized as investment income for 2017 as a result of the investment?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Grat Company acquired 30% of Suth Company's voting share capital for P2,000,000 on
January 1, 2017. Grat's 30% interest in Suth gave Grat the ability to exercise
significant influence over Suth's operating and financial policies. During2017, Suth earned
P800,000 and paid cash dividends of P500,000. Suth reported earnings of P1,000,000 for the
six months ended June 30, 2018 and P2,000,000 for the year ended December 31, 2018. On
July 1, 2018, Grat sold half of the investment in Suth for P1,500,000 cash. On such date, the
investment is measured at fair value through other comprehensive income. The fair value of
the retained investment is P1,600,000 on July 1, 2018 and P1,800,000 on December 31, 2018.
What amount should be recognized as investment income for 2017 as a result of the
investment?
O 150,000
O 500,000
O 240,000
O 800,000
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