On April 1, 2019, Tagaytay Company purchased 25,000 ordinary shares of Sulo Co. at P180 per share, a price that approximates book value as of that date. At the time of the purchase, Sulo had 100,000 ordinary shares outstanding. Tagaytay had no ownership interest in Sulo before the purchase. The first quarter statement ending March 31, 2019 of Sulo recorded earnings of P480,000. For the year ended December 31, 2019, Sulo reported profit of P2,400,000. Sulo paid Tagaytay dividends of P60,000 on June 1 and again P60,000 on December 31, 2019. During 2020, Sulo reported profit of P2,000,000 and paid dividends of P2,000,000 to its shareholders. On January 1, 2021, Tagaytay sold 10,000 ordinary shares of Sulo for P200 per share. For the year ended December 31, 2021, the reported profit of Sulo was P2,500,000 and dividends of P60,000 were paid to Tagaytay. The market value of Sulo shares remained unchanged during the year 2021. How much is the gain of Tagaytay Company on the sale of 10,000 ordinary shares of Sulo?

On April 1, 2019, Tagaytay Company purchased 25,000 ordinary shares of Sulo Co. at P180 per share, a price that approximates book value as of that date. At the time of the purchase, Sulo had 100,000 ordinary shares outstanding. Tagaytay had no ownership interest in Sulo before the purchase. The first quarter statement ending March 31, 2019 of Sulo recorded earnings of P480,000. For the year ended December 31, 2019, Sulo reported profit of P2,400,000. Sulo paid Tagaytay dividends of P60,000 on June 1 and again P60,000 on December 31, 2019. During 2020, Sulo reported profit of P2,000,000 and paid dividends of P2,000,000 to its shareholders. On January 1, 2021, Tagaytay sold 10,000 ordinary shares of Sulo for P200 per share. For the year ended December 31, 2021, the reported profit of Sulo was P2,500,000 and dividends of P60,000 were paid to Tagaytay. The market value of Sulo shares remained unchanged during the year 2021. How much is the gain of Tagaytay Company on the sale of 10,000 ordinary shares of Sulo?

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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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

On April 1, 2019, Tagaytay Company purchased 25,000 ordinary shares of Sulo Co. at P180 per share, a price that
approximates book value as of that date. At the time of the purchase, Sulo had 100,000 ordinary shares outstanding.
Tagaytay had no ownership interest in Sulo before the purchase. The first quarter statement ending March 31, 2019 of
Sulo recorded earnings of P480,000. For the year ended December 31, 2019, Sulo reported profit of P2,400,000. Sulo paid
Tagaytay dividends of P60,000 on June 1 and again P60,000 on December 31, 2019. During 2020, Sulo reported profit of
P2,000,000 and paid dividends of P2,000,000 to its shareholders. On January 1, 2021, Tagaytay sold 10,000 ordinary shares
of Sulo for P200 per share.
For the year ended December 31, 2021, the reported profit of Sulo was P2,500,000 and dividends of P60,000 were paid to
Tagaytay. The market value of Sulo shares remained unchanged during the year 2021.
How much is the gain of Tagaytay Company on the sale of 10,000 ordinary shares of Sulo?

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