Thaddeus Company purchased 30% of Norris Company’s ordinary share capital on January 1, 2020. The following events occurred after the purchase:Norris sold goods costing P500,000 for P750,000 to Thaddeus in 2020. At December 31, 2020, the goods remained unsold by Thaddeus. In 2021, Thaddeus sold such goods to its customers.On January 2, 2020, Norris also sold machinery with a carrying amount of P3,000,000 for P4,200,000 to Thaddeus. The machinery’s remaining life was 6 years.Norris reported net income of P3,500,000 and P2,500,000 in 2020 and 2021 respectively.What amount of equity in earnings of Norris should Thaddeus report in 2021?

The excess of the selling price of an asset over its carrying value is referred to as capital gain.

Answered: Norris sold goods costing P500,000 for…

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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Thaddeus Company purchased 30% of Norris Company’s ordinary share capital on January 1, 2020. The following events occurred after the purchase:

Norris sold goods costing P500,000 for P750,000 to Thaddeus in 2020. At December 31, 2020, the goods remained unsold by Thaddeus. In 2021, Thaddeus sold such goods to its customers.
On January 2, 2020, Norris also sold machinery with a carrying amount of P3,000,000 for P4,200,000 to Thaddeus. The machinery’s remaining life was 6 years.
Norris reported net income of P3,500,000 and P2,500,000 in 2020 and 2021 respectively.

What amount of equity in earnings of Norris should Thaddeus report in 2021?

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