Michael Company purchased 35% of James Company on January 1, 2016 for P11,200,000 when James Company’s carrying amount was P32,400,000. All market values equalled their CA except for Equipment with MV of P5,600,000 and CA of P7,000,000; and Building with MV of P2,600,000 and CA of P1,600,000. The equipment has a remaining useful life of 5 years, and the building has a remaining useful life of 10 years. James Company reported net income of P3,200,000 and cash dividends of P1,000,000 for 2016. Compute for the investment income for 2016.
Michael Company purchased 35% of James Company on January 1, 2016 for P11,200,000 when James Company’s carrying amount was P32,400,000. All market values equalled their CA except for Equipment with MV of P5,600,000 and CA of P7,000,000; and Building with MV of P2,600,000 and CA of P1,600,000. The equipment has a remaining useful life of 5 years, and the building has a remaining useful life of 10 years. James Company reported net income of P3,200,000 and cash dividends of P1,000,000 for 2016. Compute for the investment income for 2016.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Michael Company purchased 35% of James Company on January 1,
2016 for P11,200,000 when James Company’s carrying amount was
P32,400,000. All market values equalled their CA except for Equipment
with MV of P5,600,000 and CA of P7,000,000; and Building with MV of
P2,600,000 and CA of P1,600,000.
The equipment has a remaining useful life of 5 years, and the
building has a remaining useful life of 10 years. James Company
reported net income of P3,200,000 and cash dividends of P1,000,000
for 2016. Compute for the investment income for 2016.
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