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How much is the investment income for the current year?

How much is the investment income for the current year?

FINANCIAL ACCOUNTING
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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How much is the investment income for the current year?

P1,000,000 dividends during the current year. At the beginning of current year, Cynosure Company purchased 40% of the ordinary shares of another entity for P3,500,000 when the net assets acquired amounted to P7,000,000. At acquisition date, the carrying amounts of the identifiable assets and liabilities of the investee were equal to their fair value, except for equipment for which the fair value was P1,500,000 greater than carrying amount and inventory whose fair value was P500,000 greater than cost. The equipment has a remaining life of 4 years and the inventory was all sold during the current year. the investee reported net income of P4,000,000 and paid P1,000,000 dividends during the current year. Required:
Transcribed Image Text:P1,000,000 dividends during the current year. At the beginning of current year, Cynosure Company purchased 40% of the ordinary shares of another entity for P3,500,000 when the net assets acquired amounted to P7,000,000. At acquisition date, the carrying amounts of the identifiable assets and liabilities of the investee were equal to their fair value, except for equipment for which the fair value was P1,500,000 greater than carrying amount and inventory whose fair value was P500,000 greater than cost. The equipment has a remaining life of 4 years and the inventory was all sold during the current year. the investee reported net income of P4,000,000 and paid P1,000,000 dividends during the current year. Required:
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