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On January 1, 2016, Christine Co. acquired 20,000 ordinary shares out of the 200,000 outstanding ordinary shares of Mary Inc. for P3,400,000. The investment was classified as FVTPL. The fair values per share of Mary are as follows: Dec. 31, 2016, P160; Dec. 31, 2017, P150 and Dec. 31, 2018, P180. On January 1. 2018, Christine purchased and additional 24,000 of Mary's stock representing 12% additional interest for P3,840,000, its fair value on that date when the carrying amount of Mary's net assets was P10,000,000. The excess was attributable to the machinery having a remaining life of ten years. On December 31, 2016, Mary reported net income of P800,000 and declared and paid dividends of P400,000. On December 31, 2017, Mary reported net income of P1,400,000 and declared and paid dividends of P550,000. On December 31, 2018, Mary reported net income of P1,300,000 and declared and paid dividends of P400,000. Questions: Based on the above, answer the following: 1. How much is the amount of investment income to be recognized in the profit or loss in 2017? a. Nil 2. How much is the gain on reclassification of January 1, 2018 as a result of acquisition of 12% interest in Mary Corp to be recognized in the profit or loss? | b. 55,000 c. 82,500 d. 88,000 b. 88,000 d. 275,000 a. Nil 3. How much is the net share in the profit or loss of the associate (investment income) in 2018? a. 286,000 4. How much is the carrying amount of the investment as of December 31, 2018? a. 7,326,000 200,000 b. (198,000) c. 770,000 d. 308,000 b. 6,754,000 c. 7,810,000 d. 7,722,000

On January 1, 2016, Christine Co. acquired 20,000 ordinary shares out of the 200,000 outstanding ordinary shares of Mary Inc. for P3,400,000. The investment was classified as FVTPL. The fair values per share of Mary are as follows: Dec. 31, 2016, P160; Dec. 31, 2017, P150 and Dec. 31, 2018, P180. On January 1. 2018, Christine purchased and additional 24,000 of Mary's stock representing 12% additional interest for P3,840,000, its fair value on that date when the carrying amount of Mary's net assets was P10,000,000. The excess was attributable to the machinery having a remaining life of ten years. On December 31, 2016, Mary reported net income of P800,000 and declared and paid dividends of P400,000. On December 31, 2017, Mary reported net income of P1,400,000 and declared and paid dividends of P550,000. On December 31, 2018, Mary reported net income of P1,300,000 and declared and paid dividends of P400,000. Questions: Based on the above, answer the following: 1. How much is the amount of investment income to be recognized in the profit or loss in 2017? a. Nil 2. How much is the gain on reclassification of January 1, 2018 as a result of acquisition of 12% interest in Mary Corp to be recognized in the profit or loss? | b. 55,000 c. 82,500 d. 88,000 b. 88,000 d. 275,000 a. Nil 3. How much is the net share in the profit or loss of the associate (investment income) in 2018? a. 286,000 4. How much is the carrying amount of the investment as of December 31, 2018? a. 7,326,000 200,000 b. (198,000) c. 770,000 d. 308,000 b. 6,754,000 c. 7,810,000 d. 7,722,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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On January 1, 2016, Christine Co. acquired 20,000 ordinary shares out of the 200,000 outstanding ordinary shares of Mary Inc. for P3,400,000. The investment was classified as FVTPL. The fair values per share of Mary are as follows: Dec. 31, 2016, P160; Dec. 31, 2017, P150 and Dec. 31, 2018, P180. On January 1. 2018, Christine purchased and additional 24,000 of Mary's stock representing 12% additional interest for P3,840,000, its fair value on that date when the carrying amount of Mary's net assets was P10,000,000. The excess was attributable to the machinery having a remaining life of ten years. On December 31, 2016, Mary reported net income of P800,000 and declared and paid dividends of P400,000. On December 31, 2017, Mary reported net income of P1,400,000 and declared and paid dividends of P550,000. On December 31, 2018, Mary reported net income of P1,300,000 and declared and paid dividends of P400,000. Questions: Based on the above, answer the following: 1. How much is the amount of investment income to be recognized in the profit or loss in 2017? a. Nil 2. How much is the gain on reclassification of January 1, 2018 as a result of acquisition of 12% interest in Mary Corp to be recognized in the profit or loss? | b. 55,000 c. 82,500 d. 88,000 b. 88,000 c. 200,000 d. 275,000 a. Nil 3. How much is the net share in the profit or loss of the associate (investment income) in 2018? a. 286,000 4. How much is the carrying amount of the investment as of December 31, 2018? b. (198,000) c. 770,000 d. 308,000 a. 7,326,000 b. 6,754,000 c. 7,810,000 d. 7,722,000
Transcribed Image Text:On January 1, 2016, Christine Co. acquired 20,000 ordinary shares out of the 200,000 outstanding ordinary shares of Mary Inc. for P3,400,000. The investment was classified as FVTPL. The fair values per share of Mary are as follows: Dec. 31, 2016, P160; Dec. 31, 2017, P150 and Dec. 31, 2018, P180. On January 1. 2018, Christine purchased and additional 24,000 of Mary's stock representing 12% additional interest for P3,840,000, its fair value on that date when the carrying amount of Mary's net assets was P10,000,000. The excess was attributable to the machinery having a remaining life of ten years. On December 31, 2016, Mary reported net income of P800,000 and declared and paid dividends of P400,000. On December 31, 2017, Mary reported net income of P1,400,000 and declared and paid dividends of P550,000. On December 31, 2018, Mary reported net income of P1,300,000 and declared and paid dividends of P400,000. Questions: Based on the above, answer the following: 1. How much is the amount of investment income to be recognized in the profit or loss in 2017? a. Nil 2. How much is the gain on reclassification of January 1, 2018 as a result of acquisition of 12% interest in Mary Corp to be recognized in the profit or loss? | b. 55,000 c. 82,500 d. 88,000 b. 88,000 c. 200,000 d. 275,000 a. Nil 3. How much is the net share in the profit or loss of the associate (investment income) in 2018? a. 286,000 4. How much is the carrying amount of the investment as of December 31, 2018? b. (198,000) c. 770,000 d. 308,000 a. 7,326,000 b. 6,754,000 c. 7,810,000 d. 7,722,000
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