P200,000 and declares no dividends. What is the carrying amount of the investment in associate on December 31, 20x2? of a. 550,000 b. 590,000 c. 600,000 d. 640,000 PROBLEM 2: FOR CLASSROOM DISCUSSION 1. On January 1, 20x1, Entity A acquires 30% interest in Entity B for P600,000. Entity B reports profit of P200,000 and declares dividends of P50,000 in 20x1. How much is the carrying amount of the investment in associate on December 31, 20x1? a. 600,000 b. 660,000 c. 645,000 d. 630,000 2 Entity A uses the equity method in accounting for its 20% interest in Entity B. Entity B reports profit of P4M for the period. Entity B has outstanding 5% cumulative preference shares with an aggregate par value of P10M. Entity A holds none of the preference shares. Entity B did not declare dividends on the preference shares in the last three vears. including the current year. How much is Entity A's share in the profit of Entity B? r's a. 800,000 b. 700,000 c. 600,000 d. 500,000 3. Entity A acquires 20% interest in Entity B on September 1,

P200,000 and declares no dividends. What is the carrying amount of the investment in associate on December 31, 20x2? of a. 550,000 b. 590,000 c. 600,000 d. 640,000 PROBLEM 2: FOR CLASSROOM DISCUSSION 1. On January 1, 20x1, Entity A acquires 30% interest in Entity B for P600,000. Entity B reports profit of P200,000 and declares dividends of P50,000 in 20x1. How much is the carrying amount of the investment in associate on December 31, 20x1? a. 600,000 b. 660,000 c. 645,000 d. 630,000 2 Entity A uses the equity method in accounting for its 20% interest in Entity B. Entity B reports profit of P4M for the period. Entity B has outstanding 5% cumulative preference shares with an aggregate par value of P10M. Entity A holds none of the preference shares. Entity B did not declare dividends on the preference shares in the last three vears. including the current year. How much is Entity A's share in the profit of Entity B? r's a. 800,000 b. 700,000 c. 600,000 d. 500,000 3. Entity A acquires 20% interest in Entity B on September 1,

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. On January 1, 20x1, Entity A acquires 30% interest in Entity B
d. Entity A should not apply the equity method.
amount of the investment in associate on December 31, 20x2?
interest in Entity B. Entity B reports profit of 94M for the
amount of the investment in associate on December 31, 20x1?
dividends of P50,000 in 20x1. How much is the carrying
P200,000 and declares no dividends. What is the carrying
2. Entity A uses the equity method in accounting for its 20%
period. Entity B has outstanding 5% cumulative preference
for P600,000. Entity B reports profit of P200,000 and declares
of P300,000 at year-end. In 20x2, Entity B reports loss of
PAS 28
319
ned to exist
a. 550,000
b. 590,000
c. 600,000
d. 640,000
vestee.
vestee.
avestee.
stee's board
c. 645,000
Under this
ce is initially
600,000
a.
d. 630,000
b. 660,000
ement
e investor's
nges in
chares with an aggregate par value of P10M. Entity A holds
none of the preference shares. Entity B did not declare
dividends on the preference shares in the last three vears.
including the current year. How much is Entity A's share in
stor's share
in equity
he investor's
anges in
the profit of Entity B?
a. 800,000
b. 700,000
c. 600,000
d. 500,000
3. Entity A acquires 20% interest in Entity B on September 1,
20x1. On November 30, 20x3, because of a short-fall in cash
flows, Entity A sells one-half of the investment in Entity B. The
remaining shares held do not give Entity A significant
influence over Entity B. Entity A uses a calendar year
accounting period. During what period should Entity A apply
the equity method of PAS 28?
Start
a. Earliest period presented
b. September 1, 20x1
C. January 1, 20xl
ring decreases
ociate or joint
the investee
tee
March 31, 20
COx1, which was
clares dividends
Cease
November 30, 20x3
November 30, 20x3
November 30, 20x3

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