On January 1, 2019, B Company purchased 50000 shares of another entity for P 3 600 000. OnOctober 1, 2019, the entity receives 50 000 stockrights from the investee. Each right entitled theshareholder to acquire one share for P 85.On November 30, 2019, Investee Company paiddividends of P20 per share.The market price of the investee’s share was P 100immediately before the rights were issued and P90immediately after the rights were issued.On December 1, 2019, the entity exercised all stockrights. On December 31, 2019, the entity sold 25 000shares at P 90 per share. The stock rights are notaccounted for separately.How much dividend was received by B?What is the gain on sale of investment thatshould be recognized in 2019 using the FIFOApproach?What is the gain on sale of investment thatshould be recognized in 2019 using theAverage Approach?How did you solve this? Thanks! On January 1, 2019, B Company purchased000 shares of another entity for P 3 600 000. OnOctober 1, 2019, the entity receives 50 000 stockrights from the investee. Each right entitled theshareholder to acquire one share for P 85.50On November 30, 2019, Investee Company paiddividends of P20 per share.The market price of the investee's share was P 100immediately before the rights were issued and P90immediately after the rights were issued.On December 1, 2019, the entity exercised all stockrights. On December 31, 2019, the entity sold 25 000shares at P 90 per share. The stcck rights are notaccounted for separately.5. How much dividend was received by B?6. What is the gain on sale of investment thatshould be recognized in 2019 using the FIFOApproach?7. What is the gain on sale of investment thatshould be recognized in 2019 using theAverage Approach

Under the average approach, the cost per unit of security is measured each time when the number of…

Answered: On January 1, 2019, B Company purchased…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 26E

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Question

On January 1, 2019, B Company purchased 50
000 shares of another entity for P 3 600 000. On
October 1, 2019, the entity receives 50 000 stock
rights from the investee. Each right entitled the
shareholder to acquire one share for P 85.
On November 30, 2019, Investee Company paid
dividends of P20 per share.
The market price of the investee’s share was P 100
immediately before the rights were issued and P90
immediately after the rights were issued.
On December 1, 2019, the entity exercised all stock
rights. On December 31, 2019, the entity sold 25 000
shares at P 90 per share. The stock rights are not
accounted for separately.

How much dividend was received by B?
What is the gain on sale of investment that
should be recognized in 2019 using the FIFO
Approach?
What is the gain on sale of investment that
should be recognized in 2019 using the
Average Approach?

How did you solve this? Thanks!

On January 1, 2019, B Company purchased
000 shares of another entity for P 3 600 000. On
October 1, 2019, the entity receives 50 000 stock
rights from the investee. Each right entitled the
shareholder to acquire one share for P 85.
50
On November 30, 2019, Investee Company paid
dividends of P20 per share.
The market price of the investee's share was P 100
immediately before the rights were issued and P90
immediately after the rights were issued.
On December 1, 2019, the entity exercised all stock
rights. On December 31, 2019, the entity sold 25 000
shares at P 90 per share. The stcck rights are not
accounted for separately.
5. How much dividend was received by B?
6. What is the gain on sale of investment that
should be recognized in 2019 using the FIFO
Approach?
7. What is the gain on sale of investment that
should be recognized in 2019 using the
Average Approach

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