On January 1, 2020, MC Company acquired 25% of the ordinary shares that carry voting rights at a general meeting of shareholders of DC Company for P400,000.The purchase price is equal to the fair value of the 25% of DC’s identifiable assets less 25% of its identifiable liabilities. For the year ended 2020, DC Company recognized a loss of P2,400,000. MC Company has no constructive or legal obligation in respect of its associate and has made no payment on its behalf. For the year ended 2021, DC Company recognized a profit of P3,200,000. What is the carrying value of MC investment in DC as of December 31, 2021? a. P400,000 b. P600,000 c. None d. P800,000
On January 1, 2020, MC Company acquired 25% of the ordinary shares that carry voting rights at a general meeting of shareholders of DC Company for P400,000.The purchase price is equal to the fair value of the 25% of DC’s identifiable assets less 25% of its identifiable liabilities. For the year ended 2020, DC Company recognized a loss of P2,400,000. MC Company has no constructive or legal obligation in respect of its associate and has made no payment on its behalf. For the year ended 2021, DC Company recognized a profit of P3,200,000. What is the carrying value of MC investment in DC as of December 31, 2021? a. P400,000 b. P600,000 c. None d. P800,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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On January 1, 2020, MC Company acquired 25% of the ordinary shares that carry voting rights at a general meeting of shareholders of DC Company for P400,000.The purchase price is equal to the fair value of the 25% of DC’s identifiable assets less 25% of its identifiable liabilities. For the year ended 2020, DC Company recognized a loss of P2,400,000. MC Company has no constructive or legal obligation in respect of its associate and has made no payment on its behalf. For the year ended 2021, DC Company recognized a profit of P3,200,000.
What is the carrying value of MC investment in DC as of December 31, 2021?
a. P400,000
b. P600,000
c. None
d. P800,000
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