On January 1, 2016, Marissa Company acquired 25% of the outstanding shares of an investee at a total cost of ₱7,000,000. At the time, the carrying amount of the net assets of the investee totaled ₱24,000,000. The investee owned equipment with 5-year remaining life and with a fair value of ₱2,000,000 more than carrying amount. The investee owned land with a fair value of ₱1,000,000 more than carrying amount. The investee earned net income of ₱5,000,000 evenly during the current year. The investee declared and paid a cash dividend of ₱3,000,000 to shareholders at year-end. The fair value of the investment at yearend is ₱7,500,000. 1. What is the goodwill arising from the investment in associate? a. 750,000 b. 500,000 c. 250,000 d. 0 2. What is the investment income for 2016? a. 1,250,000 b. 1,150,000 c. 900,000 d. 650,000 3. What is the carrying amount of the investment on December 31, 2016? a. 7,400,000 b. 7,500,000 c. 7,000,000 d. 8,150,000
On January 1, 2016, Marissa Company acquired 25% of the outstanding shares of an investee at a total cost of ₱7,000,000. At the time, the carrying amount of the net assets of the investee totaled ₱24,000,000.
The investee owned equipment with 5-year remaining life and with a fair value of ₱2,000,000 more than carrying amount. The investee owned land with a fair value of ₱1,000,000 more than carrying amount.
The investee earned net income of ₱5,000,000 evenly during the current year. The investee declared and paid a cash dividend of ₱3,000,000 to shareholders at year-end. The fair value of the investment at yearend is ₱7,500,000.
1. What is the
a. 750,000
b. 500,000
c. 250,000
d. 0
2. What is the investment income for 2016?
a. 1,250,000
b. 1,150,000
c. 900,000
d. 650,000
3. What is the carrying amount of the investment on December 31, 2016?
a. 7,400,000
b. 7,500,000
c. 7,000,000
d. 8,150,000
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