On January 1, 2021, Pancake Co. bought 250,000 ordinary shares of House Co. for P3,000,000, representing 25% of the outstanding shares of House, and allowing Pancake to exercise significant influence over House. Pancake has determined that the book value of House's net assets approximates its fair value. During 2021, House earned a net income of P4,000,000. The entity also declared and paid total cash dividends of P1,000,000 during the year. At the end of the year, there was objective evidence of impairment for the shares. The recoverable amount was determined to be at P2,900,000.

On January 1, 2021, Pancake Co. bought 250,000 ordinary shares of House Co. for P3,000,000, representing 25% of the outstanding shares of House, and allowing Pancake to exercise significant influence over House. Pancake has determined that the book value of House's net assets approximates its fair value. During 2021, House earned a net income of P4,000,000. The entity also declared and paid total cash dividends of P1,000,000 during the year. At the end of the year, there was objective evidence of impairment for the shares. The recoverable amount was determined to be at P2,900,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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