On January 1, 2021, Kristine Company acquired 10% of the outstanding voting shares of another entity. On January 1, 2022, Kristine Company gained the ability to exercise significant influence over financial and operating control of the entity by acquiring additional 20% of the investee’s outstanding shares. The two purchase were made at price proportionate to the value assigned to the investee’s net assets which equaled their carrying amount. For the years ended December 31, 2021 and 2022, the investee reported the following: 2021 2022 Dividend paid 3,000,000 8,000,000 Net income 7,000,000 9,000,000 What total amount should Kristine include in profit or loss for the year ended December 31, 2022
On January 1, 2021, Kristine Company acquired 10% of the outstanding voting shares of another entity. On January 1, 2022, Kristine Company gained the ability to exercise significant influence over financial and operating control of the entity by acquiring additional 20% of the investee’s outstanding shares. The two purchase were made at price proportionate to the value assigned to the investee’s net assets which equaled their carrying amount. For the years ended December 31, 2021 and 2022, the investee reported the following: 2021 2022 Dividend paid 3,000,000 8,000,000 Net income 7,000,000 9,000,000 What total amount should Kristine include in profit or loss for the year ended December 31, 2022
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2021, Kristine Company acquired 10% of the outstanding voting shares of another
entity. On January 1, 2022, Kristine Company gained the ability to exercise significant influence over
financial and operating control of the entity by acquiring additional 20% of the investee’s outstanding
shares. The two purchase were made at price proportionate to the value assigned to the investee’s
net assets which equaled their carrying amount. For the years ended December 31, 2021 and 2022,
the investee reported the following:
2021 2022
Dividend paid 3,000,000 8,000,000
Net income 7,000,000 9,000,000
What total amount should Kristine include in profit or loss for the year ended December 31, 2022?
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