On April 1, 2020, Car Company purchased 25,000 ordinary shares of Way Company at an amount which reflected book value as of that date. At the time of purchase, Way had 100,000 ordinary shares outstanding. Car had no ownership interest in Way before the purchase. The first quarter statement ending March 31, 2020 of Way had profit of P480,000. For the year ended December 31, 2020, Way reported profit of P2,400,000. Way paid Car dividends of P50,000 on June 1 and P80,000 on December 31, 2018. The carrying amount of the investment in Way at December 31, 2020 is P4,840,000. What was Car's acquisition cost of its investment in Way on April 1.2020? a. P4,360,000 b. P4,500,000 c. P4,840,000 d. P5,180,000
On April 1, 2020, Car Company purchased 25,000 ordinary shares of Way Company at an amount which reflected book value as of that date. At the time of purchase, Way had 100,000 ordinary shares outstanding. Car had no ownership interest in Way before the purchase. The first quarter statement ending March 31, 2020 of Way had profit of P480,000. For the year ended December 31, 2020, Way reported profit of P2,400,000. Way paid Car dividends of P50,000 on June 1 and P80,000 on December 31, 2018. The carrying amount of the investment in Way at December 31, 2020 is P4,840,000. What was Car's acquisition cost of its investment in Way on April 1.2020? a. P4,360,000 b. P4,500,000 c. P4,840,000 d. P5,180,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On April 1, 2020, Car Company purchased 25,000 ordinary shares of Way Company at an amount which reflected book value as of that date. At the time of purchase, Way had 100,000 ordinary shares outstanding. Car had no ownership interest in Way before the purchase. The first quarter statement ending March 31, 2020 of Way had profit of P480,000. For the year ended December 31, 2020, Way reported profit of P2,400,000. Way paid Car dividends of P50,000 on June 1 and P80,000 on December 31, 2018. The carrying amount of the investment in Way at December 31, 2020 is P4,840,000.
What was Car's acquisition cost of its investment in Way on April 1.2020?
What was Car's acquisition cost of its investment in Way on April 1.2020?
a. P4,360,000
b. P4,500,000
c. P4,840,000
d. P5,180,000
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