On January 1, 2008, Pedestal Company purchased 80% of the outstanding shares of Starlet
On January 1, 2008, Pedestal Company purchased 80% of the outstanding shares of Starlet
Company at a cost of P800,000. On that date, Starlet Company had P300,000 of Ordinary Share
Capital and P600,000 of
For 2008, Pedestal Company had income of P300,000 from its own operations and paid
dividends of P150,000. On the other hand, Starlet Company reported a net income of P100,000
and paid dividends of P40,000. All assets and liabilities of Starlet Company have book values
approximately equal to their respective market values.
Pedestal Company uses the equity method to account for its investment in Starlet
Company. Impairment loss on
1. The amount Pedestal Company should record as Equity in Starlet Company Income for
2008 is
a. P78,000 c. P82,000
b. P80,000 d. P76,000
Step by step
Solved in 2 steps
