On January 2, 2021, A Company purchased 25,000 shares of V Company's 100,000 outstanding ordinary shares for P300 per share. The book value of V Company's net assets is P29,000,000.00. The book value of V Company's factory equipment is P4,000,000.00 and its fair value is P5,000,000.00. The factory equipment has a remaining useful life of 10 years. All through out the year 2021, the factory equipment was carried at carrying value. On December 31, 2021, V Company paid P2,000,000.00 cash dividends to its ordinary shareholders. V Company reported net of tax income for the whole year in the amount of P4,500,000.00. On January 1, 2022, A Company revalued its equipment. At the time of revaluation, the equipment has a carrying value of P4,500,000.00. The revaluation was made known to A Company. For the year ended December 31, 2022, V Company reported a net of tax income of P5,000,000.000 and paid a cash dividends of P2,800,000.00. Income tax rate is 32%. What amount of income should A Company report in its 2022 income statement in this investment? P1,208,000.00 P1,225,000.00 P1,223,000.00 P1,250,000.00

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 2, 2021, A Company purchased 25,000 shares of V Company's 100,000 outstanding ordinary shares for P300 per share. The book value of V Company's net assets is P29,000,000.00. The book value of V Company's factory equipment is P4,000,000.00 and its fair value is P5,000,000.00. The factory equipment has a remaining useful life of 10 years. All through out the year 2021, the factory equipment was carried at carrying value. On December 31, 2021, V Company paid P2,000,000.00 cash dividends to its ordinary shareholders. V Company reported net of tax income for the whole year in the amount of P4,500,000.00. On January 1, 2022, A Company revalued its equipment. At the time of revaluation, the equipment has a carrying value of P4,500,000.00. The revaluation was made known to A Company. For the year ended December 31, 2022, V Company reported a net of tax income of P5,000,000.000 and paid a cash dividends of P2,800,000.00. Income tax rate is 32%. What amount of income should A Company report in its 2022 income statement in this investment? P1,208,000.00 P1,225,000.00 P1,223,000.00 P1,250,000.00
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