On January 1, 2017, Angelic Company acquired as a long term investment for P7,000,000 a 40% interest in an investee when the fair value of the net assets was P17,500,000. The investee reported the following net losses: 2017 2018 2019 2020 5,000,000 7,000,000 8,000,000 4,000,000 On January 1, 2019, Angelic Company made cash advances of P2,000,000 to the investee. On December 31, 2020, it is not expected that Angelic Company will provide further financial support for the investee.
On January 1, 2017, Angelic Company acquired as a long term investment for P7,000,000 a 40% interest in an investee when the fair value of the net assets was P17,500,000. The investee reported the following net losses: 2017 2018 2019 2020 5,000,000 7,000,000 8,000,000 4,000,000 On January 1, 2019, Angelic Company made cash advances of P2,000,000 to the investee. On December 31, 2020, it is not expected that Angelic Company will provide further financial support for the investee.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
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Question
How much must be recognized by Angelic Company as its share in the 2020 losses of the investee?
![On January 1, 2017, Angelic Company acquired as a long term
investment for P7,000,000 a 40% interest in an investee when
the fair value of the net assets was P17,500,000. The investee
reported the following net losses:
2017
2018
2019
2020
5,000,000
7,000,000
8,000,000
4,000,000
On January 1, 2019, Angelic Company made cash advances
of P2,000,000 to the investee. On December 31, 2020, it is not
expected that Angelic Company will provide further financial
support for the investee.
Required:
12 PM](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0579fae6-72c1-44fd-a2d3-03d9bdeb2104%2F8077d5dd-5697-4e1f-8161-70eaf2af9af4%2F3dx4o64_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On January 1, 2017, Angelic Company acquired as a long term
investment for P7,000,000 a 40% interest in an investee when
the fair value of the net assets was P17,500,000. The investee
reported the following net losses:
2017
2018
2019
2020
5,000,000
7,000,000
8,000,000
4,000,000
On January 1, 2019, Angelic Company made cash advances
of P2,000,000 to the investee. On December 31, 2020, it is not
expected that Angelic Company will provide further financial
support for the investee.
Required:
12 PM
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