Problem 18-8 (IFRS) On January E, 2020, Forensic Company acquired a 10% interest in an investee r P3,000,000. The investment was accounted for using the cast method. On January 1, 2021, the antity acquired a further 15% interest in the investee for P6,750,000. On such' date, the carrying amount of the net assets of the investee was P36,000,000 and the fair value of the 16% interest was P4,500,000. The fair value of the net assets of the investee is equal to carrying amount except for an equipment whose fair value exceeds carrying amount by P4,000,000. The equipment has a remaining life of 5 years. The investee reported net income of P8,000,000 for 2021 and paid dividend of P5,000,000 on December 31, 2021. 1. What is the gain on remeasurement to equity to be recognized for 2021? a. 1,500,000 b. 4,500,000 c. 2,250,000 d. 2. What is the goodwill arising from the acquisition on January 1, 2021? a. 2,250,000 b. 1,250,000 c. 1,350,000 d. 350,000 3. What is the carrying amount of the investment in associate on December 31, 2021? a. 11,250,000 b. 11,800,000 c. 12,000,000 d. 14,300,000

Problem 18-8 (IFRS) On January E, 2020, Forensic Company acquired a 10% interest in an investee r P3,000,000. The investment was accounted for using the cast method. On January 1, 2021, the antity acquired a further 15% interest in the investee for P6,750,000. On such' date, the carrying amount of the net assets of the investee was P36,000,000 and the fair value of the 16% interest was P4,500,000. The fair value of the net assets of the investee is equal to carrying amount except for an equipment whose fair value exceeds carrying amount by P4,000,000. The equipment has a remaining life of 5 years. The investee reported net income of P8,000,000 for 2021 and paid dividend of P5,000,000 on December 31, 2021. 1. What is the gain on remeasurement to equity to be recognized for 2021? a. 1,500,000 b. 4,500,000 c. 2,250,000 d. 2. What is the goodwill arising from the acquisition on January 1, 2021? a. 2,250,000 b. 1,250,000 c. 1,350,000 d. 350,000 3. What is the carrying amount of the investment in associate on December 31, 2021? a. 11,250,000 b. 11,800,000 c. 12,000,000 d. 14,300,000

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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On January 1, 2022 the Aquila Co. acquired 100% of the Taurus Co. when the fair value of Taurus net assets was P4,000,000 and their carrying amount was P3,500,000. The consideration transferred consisted of P4,400,000 in cash transferred at the acquisition date, plus another P200,000 in cash to be transferred 10 months after (November 1, 2022) the acquisition date if a specified profit target was met by Taurus.At the acquisition date, there was only a low probability, around 40% of the profit target is being met.On November 1, 2022, additional P200,000 was paid by Aquila to Taurus after the latter met the specified profit target.How much is the goodwill to be reported on December 31, 2022? a. P480,000 b. P600,000 c. P980,000 d. P400,000
7. What is the amount of revaluation surplus on December 31, 2021? A. 600,000 B. 700,000 C. 800,000 D. 0 E. None of them
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6. Joel Company
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Hypothetical Corporation incurred the following expenses: 2019 2020Research and Development 619,000 703,000 The new product will be available for sale July 1, 2021. Calculate the deduction for R&D expenses for 2019, 2020, and 2021 under the following independent assumptions:a. Armando Corporation elects to expense the R&D expenses. b. Armando Corporation elects to amortize the R&D expenses over 60 months.