Parent Company acquires 15% of Subsidiary Company's ordinary shares for P500,000 cash and carries the investment using the equity method. A few months later, Parent purchases another 60% of Subsidiary's ordinary shares for P2,160,000. At that date, Subsidiary 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.
Parent Company acquires 15% of Subsidiary Company's ordinary shares for P500,000 cash and carries the investment using the equity method. A few months later, Parent purchases another 60% of Subsidiary's ordinary shares for P2,160,000. At that date, Subsidiary 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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What is the
![Parent Company acquires 15% of Subsidiary Company's ordinary shares for
P500,000 cash and carries the investment using the equity method. A few
months later, Parent purchases another 60% of Subsidiary's ordinary shares for
P2,160,000. At that date, Subsidiary 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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F62e1f462-25ef-4ec3-8ec0-4009db49ceb7%2F69ea4969-ec92-425f-ab6e-663aac94791d%2Fknvsnke_processed.png&w=3840&q=75)
Transcribed Image Text:Parent Company acquires 15% of Subsidiary Company's ordinary shares for
P500,000 cash and carries the investment using the equity method. A few
months later, Parent purchases another 60% of Subsidiary's ordinary shares for
P2,160,000. At that date, Subsidiary 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.
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