On January 1, 2020, Albay Company acquired a 30% interest in Bataan Company for P2,430,000. On this date, Bataan Company’s shareholders’ equity was P5,000,000. At acquisition date, the carrying amount of Bataan Company’s identifiable net assets approximated their fair values, except for the following: Page 2of 2Excess of Fair Value Over Carrying ValueLandP2,000,000Inventory600,000 Machinery500,000All of the inventories that are undervalued onJanuary 1, 2020 was sold during the year. The machinery is being depreciated using the straight-line method and had a remaining useful life of 4 years onJanuary 1, 2020. For the year 2020, Bataan Company reported profit of P1,520,000 and paid its shareholders dividends of P650,000.Required: What is the carrying amount of the investment in associates onDecember 31, 2020?

On January 1, 2020, Albay Company acquired a 30% interest in Bataan Company for P2,430,000. On this date, Bataan Company’s shareholders’ equity was P5,000,000. At acquisition date, the carrying amount of Bataan Company’s identifiable net assets approximated their fair values, except for the following: Page 2of 2Excess of Fair Value Over Carrying ValueLandP2,000,000Inventory600,000 Machinery500,000All of the inventories that are undervalued onJanuary 1, 2020 was sold during the year. The machinery is being depreciated using the straight-line method and had a remaining useful life of 4 years onJanuary 1, 2020. For the year 2020, Bataan Company reported profit of P1,520,000 and paid its shareholders dividends of P650,000.Required: What is the carrying amount of the investment in associates onDecember 31, 2020?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 30E

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