On January 1 of the current year, Yellow Company purchased 40% of the outstanding ordinary shares of Orange company paying P2,560,000 when the carrying amount of the net assets of Orange equaled P5,000,000. The difference was attributed to equipment which had a carrying amount of P2,200,000 and a fair value of P3,600,000. The remaining useful life of the equipment was 4 years. During the current year, Orange company, reported net income of P1,600,000 and paid cash dividends of P1,000,000. What amount should be reported as investment income for the current year? O 640,000 O 400,000 O 500,000 560,000
On January 1 of the current year, Yellow Company purchased 40% of the outstanding ordinary shares of Orange company paying P2,560,000 when the carrying amount of the net assets of Orange equaled P5,000,000. The difference was attributed to equipment which had a carrying amount of P2,200,000 and a fair value of P3,600,000. The remaining useful life of the equipment was 4 years. During the current year, Orange company, reported net income of P1,600,000 and paid cash dividends of P1,000,000. What amount should be reported as investment income for the current year? O 640,000 O 400,000 O 500,000 560,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![On January 1 of the current year, Yellow Company purchased 40% of the outstanding ordinary shares of
Orange company paying P2,560,000 when the carrying amount of the net assets of Orange equaled
P5,000,000. The difference was attributed to equipment which had a carrying amount of P2,200,000 and
a fair value of P3,600,000. The remaining useful life of the equipment was 4 years. During the current
year, Orange company, reported net income of P1,600,000 and paid cash dividends of P1,000,000. What
amount should be reported as investment income for the current year?
O 640,000
O 400,000
500,000
O 560,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F54181678-8bdb-4f35-b8ed-d315de9633e6%2F37f59bc9-3036-4cda-8d93-2b628da37ed3%2Ffaf3z8k_processed.png&w=3840&q=75)
Transcribed Image Text:On January 1 of the current year, Yellow Company purchased 40% of the outstanding ordinary shares of
Orange company paying P2,560,000 when the carrying amount of the net assets of Orange equaled
P5,000,000. The difference was attributed to equipment which had a carrying amount of P2,200,000 and
a fair value of P3,600,000. The remaining useful life of the equipment was 4 years. During the current
year, Orange company, reported net income of P1,600,000 and paid cash dividends of P1,000,000. What
amount should be reported as investment income for the current year?
O 640,000
O 400,000
500,000
O 560,000
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