On March 31, 2020, QuezonCompany purchased 120,000 ordinary shares ofRizalCompany for P1,700,000, representing 30% of RizalCompany’s outstanding ordinary shares and an underlying equity of P1,400,000 in RizalCompany’s net assets on that date. The excess of the acquisition cost over the equity acquired cannot be attributed to any tangible asset. As a result of Quezon’s 30% ownership of RizalCompany, Quezonhas the ability to exercise significant influence over RizalCompany’s financial and operating policies.On March 1, June1, September 1 and December 1, all of 2020, RizalCompany paid quarterly dividend of P0.50 per ordinary share on each of these dates.RizalCompany’s profit for the year ended December 31, 2020was P1,200,000 that was earned evenly throughout the year. AtDecember 31, 2020, each ordinary share of RizalCompany was selling at P16.Required:1.What is QuezonCompany’s income from associates for the year 2020?2.What is the investment carrying amount onDecember 31, 2020?3.Assuming the excess of acquisition cost over the underlying equity acquired is attributable to a piece of equipment with a remaining life of 5 years on the date of investment acquisition, and depreciation on a straight-line basis, what is the investment carrying amount at December 31, 2020?
On March 31, 2020, QuezonCompany purchased 120,000 ordinary shares ofRizalCompany for P1,700,000, representing 30% of RizalCompany’s outstanding ordinary shares and an underlying equity of P1,400,000 in RizalCompany’s net assets on that date. The excess of the acquisition
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