Pain Corporation (PC) owns an 85% interest in Gain Corporation (GC). On January 1,2019, PC decided to sell a 50% interest in GC to a third party in exchange for cash of ₱600,000. At the disposal date the total fair value of GC amounts to ₱1,000,000. Furthermore, in PC’s consolidated financial statements the carrying value of GC’s net assets is ₱1,000,000 and the carrying value of the non-controlling interest in GC (including the non-controlling interest’s share of accumulated other comprehensive income) is ₱100,000. As a result of this transaction, PC loses control of GC but retains a 35% interest in the former subsidiary, valued at ₱350,000 on that date. Requirement: Solve for the Gain or Loss on disposal
Pain Corporation (PC) owns an 85% interest in Gain Corporation (GC). On January 1,2019, PC decided to sell a 50% interest in GC to a third party in exchange for cash of ₱600,000. At the disposal date the total fair value of GC amounts to ₱1,000,000. Furthermore, in PC’s consolidated financial statements the carrying value of GC’s net assets is ₱1,000,000 and the carrying value of the non-controlling interest in GC (including the non-controlling interest’s share of accumulated other comprehensive income) is ₱100,000. As a result of this transaction, PC loses control of GC but retains a 35% interest in the former subsidiary, valued at ₱350,000 on that date.
Requirement:
Solve for the Gain or Loss on disposal
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