On January 1, 2014, an investor acquired 20% interest in an investee enabling the investor to exercise significant influence over the investee. On this date, the identifiable assets and liabilities of the investee are recorded at fair value. During the year, the investee reported net income of P2,000,000 and paid no dividend. Also, during the year, the investee sold inventory costing P200,000 for P300,000 to the investor. The inventory is unsold by the investor on December 31,2014. What amount is to be recorded as the investor’s share in net income?
On January 1, 2014, an investor acquired 20% interest in an investee enabling the investor to exercise significant influence over the investee. On this date, the identifiable assets and liabilities of the investee are recorded at fair value. During the year, the investee reported net income of P2,000,000 and paid no dividend. Also, during the year, the investee sold inventory costing P200,000 for P300,000 to the investor. The inventory is unsold by the investor on December 31,2014. What amount is to be recorded as the investor’s share in net income?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On January 1, 2014, an investor acquired 20% interest in an
investee enabling the investor to exercise significant influence over
the investee. On this date, the identifiable assets and liabilities of the
investee are recorded at fair value.
During the year, the investee reported net income of P2,000,000
and paid no dividend.
Also, during the year, the investee sold inventory costing P200,000
for P300,000 to the investor. The inventory is unsold by the investor
on December 31,2014.
What amount is to be recorded as the investor’s share in net
income?
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