Parekoy Company acquires 150,000 of the 1,000,000 Marekoy Company’s common stock for P500,000 cash and carries the investment as a financial asset. A few months later, Parekoy purchases another 600,000 of Marekoy Company’s stock for P2,160,000. At that date, Marekoy Company reports identifiable assets with a book value of P3,900,000 and a fair value of P5,100,000, and it has liabilities with a book value and fair value of P1,900,000. The fair value of the non-controlling interest in Marekoy Company is P900,000. 1.Non-controlling interest arising on consolidation is to be valued on the full (fair value) basis or “Full/Gross-up” Goodwill: a. P300,000 b. P500,000 c. P800,000 d. P900,000
Problem 1
Parekoy Company acquires 150,000 of the 1,000,000 Marekoy Company’s common stock for
P500,000 cash and carries the investment as a financial asset. A few months later, Parekoy
purchases another 600,000 of Marekoy Company’s stock for P2,160,000. At that date,
Marekoy Company reports identifiable assets with a book value of P3,900,000 and a fair
value of P5,100,000, and it has liabilities with a book value and fair value of P1,900,000. The
fair value of the non-controlling interest in Marekoy Company is P900,000.
1.Non-controlling interest arising on consolidation is to be valued on the full (fair value) basis
or “Full/Gross-up”
a. P300,000
b. P500,000
c. P800,000
d. P900,000
2. The remeasurement gain or loss to be recognized to
ownership is a FVTPL (fair value through profit and loss)when the additional shares are
acquired:
a. Zero
b. P40,000 gain
c. P40,000 loss
d. P68,000 loss
3. The remeasurement gain or loss to be recognized to profit or loss account if the 15%
ownership is a FVTOCI (fair value through other comprehensive income)when the
additional shares are acquired:
a. Zero
b. P40,000 gain
c. P40,000 loss
d. P68,000 loss
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