POPOY Co. purchased 40% of BASHA Corp. on April 1, 2022, for P500,000 when BASHA's net assets has a carrying value of P1,260,000. At date of acquisition, the fair value of BASHA's net assets equaled their book values except for the following: BASHA's equipment has a fair value and carrying value of P550,000 and P500,000, respectively. The equipment has a remaining useful life of 10 years. BASHA's building has a fair value and carrying value of P600,000 and P640,000, respectively. The building has a remaining useful life of 20 years. BASHA's inventory has a fair value and carrying value of P240,000 and P180,000, respectively. Only 60% of the inventory existing at date of acquisition were sold during 2022 and the remaining were sold during 2023. BASHA's results of operations in 2022 and 2023 are as follows: 2022 net income - P150,000 2023 net loss - P30,000 BASHA paid cash dividends of P20,000 in 2022 and paid POPOY cash dividends of P10,000 in 2023. 1. What amount of investment income should be reported on POPOY's income statement for the year ended December 31, 2022? a. P45,000 b. P60,000 C. P61,700 d. P29,700 2. What amount of investment loss should be reported on POPOY's income statement for the year ended December 31, 2023? a. P22,500 b. P12,000 C. P13,200 d. P22,800 3. What is the carrying value of the investment in associate on December 31, 2023? a. P520,900 b. P526,900 C. P515,000
POPOY Co. purchased 40% of BASHA Corp. on April 1, 2022, for P500,000 when BASHA's net assets has a carrying value of P1,260,000. At date of acquisition, the fair value of BASHA's net assets equaled their book values except for the following: BASHA's equipment has a fair value and carrying value of P550,000 and P500,000, respectively. The equipment has a remaining useful life of 10 years. BASHA's building has a fair value and carrying value of P600,000 and P640,000, respectively. The building has a remaining useful life of 20 years. BASHA's inventory has a fair value and carrying value of P240,000 and P180,000, respectively. Only 60% of the inventory existing at date of acquisition were sold during 2022 and the remaining were sold during 2023. BASHA's results of operations in 2022 and 2023 are as follows: 2022 net income - P150,000 2023 net loss - P30,000 BASHA paid cash dividends of P20,000 in 2022 and paid POPOY cash dividends of P10,000 in 2023. 1. What amount of investment income should be reported on POPOY's income statement for the year ended December 31, 2022? a. P45,000 b. P60,000 C. P61,700 d. P29,700 2. What amount of investment loss should be reported on POPOY's income statement for the year ended December 31, 2023? a. P22,500 b. P12,000 C. P13,200 d. P22,800 3. What is the carrying value of the investment in associate on December 31, 2023? a. P520,900 b. P526,900 C. P515,000
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 30E
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Transcribed Image Text:2:37 PM O
75
POPOY Co. purchased 40% of BASHA Corp. on April 1, 2022,
for P500,000 when BASHA's net assets has a carrying value of
P1,260,000. At date of acquisition, the fair value of BASHA's
net assets equaled their book values except for the following:
BASHA's equipment has a fair value and carrying
value of P550,000 and P500,000, respectively. The equipment
has a remaining useful life of 10 years.
BASHA's building has a fair value and carrying
value of P600,000 and P640,000, respectively. The building has
a remaining useful life of 20 years.
BASHA's inventory has a fair value and carrying
value of P240,000 and P180,000, respectively.
Only 60% of the inventory existing at date of acquisition were
sold during 2022 and the remaining were sold during 2023.
BASHA's results of operations in 2022 and 2023 are as follows:
2022 net income - P150,000
:
2023 net loss - P30,000
BASHA paid cash dividends of P20,000 in 2022 and paid
POPOY cash dividends of P10,000 in 2023.
1.
What amount of investment income should be
reported on POPOY's income statement for the year ended
December 31, 2022?
a.
P45,000
b.
P60,000
C.
P61,700
d.
P29,700
2.
What amount of investment loss should be reported
on POPOY's income statement for the year ended December
31, 2023?
a. P22,500
b. P12,000
C.
P13,200
d.
P22,800
3.
What is the carrying value of the investment in
associate on December 31, 2023?
a.
P520,900
b.
P526,900
C.
P515,000
d. P488,900
BIU A
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