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On January 2, 20x5 Felix paid P4,500,000 cash for a 80% interest in Rivera at a price of P150,000 less than the underlying book value of net assets. The excess amount was allocated to overvalued equipment with three year remaining useful life.   The net income and dividend paid of Felix and Rivera from their own operation for 20x5 are as follows:                                                   Felix                       Rivera

On January 2, 20x5 Felix paid P4,500,000 cash for a 80% interest in Rivera at a price of P150,000 less than the underlying book value of net assets. The excess amount was allocated to overvalued equipment with three year remaining useful life.   The net income and dividend paid of Felix and Rivera from their own operation for 20x5 are as follows:                                                   Felix                       Rivera

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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18. On January 2, 20x5 Felix paid P4,500,000 cash for a 80% interest in Rivera at a price of P150,000 less than the underlying book value of net assets. The excess amount was allocated to overvalued equipment with three year remaining useful life.

 

The net income and dividend paid of Felix and Rivera from their own operation for 20x5 are as follows:

 

                                                Felix                       Rivera

Net Income                        2,000,000             500,000

Dividend                              500,000                 100,000

What is the amount of investment account under cost method on December 31, 20x5?

  1. 4,500,000
  2. 4,780,000
  3. 4,820,000
  4. 4,860,000
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