Answered: On December 31, 2014, how much should…

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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Question

On January 2, 2014, MARIE CORP. bought 30% of the outstanding ordinary shares of CURIE INC. for P2,580,000 cash. MARIE accounts for this investment by the equity method. At the date of acquisition of the stock, MARIE's net assets had a book and fair value of P6,200,000. CURIE's net profit for the year ended December 31, 2014 was P1,800,000. During 2014, CURIE declared and paid cash dividends of P200,000. CURIE INC. also reported the following changes in equity that were not included in the profit or loss; Unrealized loss on equity investment at fair value to other comprehensive income, P300,000 and a Revaluation surplus on property, plant and equipment, P800,000. On December 31, 2014, how much should MARIE CORP. carry its investment in CURIE INC.?

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