Leslie's Company bought 20% of Prudence Company's ordinary share on January 1, 2020 for P3,700,000. The carrying amount of Prudence's net assets at purchase date totaled P16,000,000. Fair values and carrying amounts were the same for all items, except for land and inventory, for which fair values exceed their carrying amounts by P3,000,000 and P1,000,000 respectively. All inventories at January 1, 2020 were sold during the year. During 2020, Prudence reported profit of P5,500,000 and paid P1,500,000 cash dividends. What amount should Leslie's Company report as income from investment in its 2020 profit or loss section of the statement of comprehensive income?

Leslie's Company bought 20% of Prudence Company's ordinary share on January 1, 2020 for P3,700,000. The carrying amount of Prudence's net assets at purchase date totaled P16,000,000. Fair values and carrying amounts were the same for all items, except for land and inventory, for which fair values exceed their carrying amounts by P3,000,000 and P1,000,000 respectively. All inventories at January 1, 2020 were sold during the year. During 2020, Prudence reported profit of P5,500,000 and paid P1,500,000 cash dividends. What amount should Leslie's Company report as income from investment in its 2020 profit or loss section of the statement of comprehensive income?

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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Leslie's Company bought 20% of Prudence Company's ordinary share on January 1, 2020 for P3,700,000. The carrying amount of Prudence's net assets at purchase date totaled P16,000,000. Fair values and carrying amounts were the same for all items, except for land and inventory, for which fair values exceed their carrying amounts by P3,000,000 and P1,000,000 respectively. All inventories at January 1, 2020 were sold during the year. During 2020, Prudence reported profit of P5,500,000 and paid P1,500,000 cash dividends. What amount should Leslie's Company report as investment in associate on December 31, 2020?