On July 1, 2020, Ron Company purchased 25% of Buck Company's ordinary shares. No goodwill resulted from the acquisition; however, the purchase difference of PI,000,000 was allocated to an undervalued equipment with a remaining useful life of five years. Kon appropriately carries this investment using equity method and the balance of the Investment account was P12,000,000 at December 31, 2020. Buck reported profit of P20,000,000 for the year ended December 31. 2018 and paid Ron dividends of P1,000,000 on December 31, 2020. How much did Ron pay for its 25% interest in Buck Company? a. P10,600,000 b. P10,400,000 c. P 9,900,000 d. P 9,650,000
On July 1, 2020, Ron Company purchased 25% of Buck Company's ordinary shares. No goodwill resulted from the acquisition; however, the purchase difference of PI,000,000 was allocated to an undervalued equipment with a remaining useful life of five years. Kon appropriately carries this investment using equity method and the balance of the Investment account was P12,000,000 at December 31, 2020. Buck reported profit of P20,000,000 for the year ended December 31. 2018 and paid Ron dividends of P1,000,000 on December 31, 2020. How much did Ron pay for its 25% interest in Buck Company? a. P10,600,000 b. P10,400,000 c. P 9,900,000 d. P 9,650,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On July 1, 2020, Ron Company purchased 25% of Buck Company's ordinary shares. No goodwill resulted from the acquisition; however, the purchase difference of PI,000,000 was allocated to an undervalued equipment with a remaining useful life of five years. Kon appropriately carries this investment using equity method and the balance of the Investment account was P12,000,000 at December 31, 2020. Buck reported profit of P20,000,000 for the year ended December 31. 2018 and paid Ron dividends of P1,000,000 on December 31, 2020.
How much did Ron pay for its 25% interest in Buck Company?
How much did Ron pay for its 25% interest in Buck Company?
a. P10,600,000
b. P10,400,000
c. P 9,900,000
d. P 9,650,000
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