PROBLEM 37 On January 1, 2020, Evelyn Company acquired 10,000 shares of GHI Corporation for P600,000. GHI Corporation has the following equity account on January 1, 2020. 10% Non-Cumulative Preference Shares, par value P100; Authorized shares, 100,000; Issued and outstanding, 50,000 shares - P 5,000,000 Ordinary Shares, P50 par value; Authorized shares, 500,000; - 25,000,000 Issued and outstanding, 75,000 shares Retained Earnings - 10,000,000 On January 1, 2021, Evelyn acquired an additional 5,000 shares of GHI Corporation for P300,000. Theacquisition resulted in 20% ownership, which is considered significant since Evelyn was able to get a seat in the board of directors of GHI Corporation. GHI Corporation has the following fair values of its shares as follows: 2020 - P65 per share 2021 - P72 per share GHI Corporation reported the following at year-end: Net Income Dividends 2020 P5,000,000 P2,000,000 2021 6,500,000 3,000,000 Requirements: 1. Prepare the necessary journal entries to record the above transactions? 2. What is the carrying value of the investment on December 31, 2020? December 31, 2021? 3. How much is the income from investment in 2020? 2021?
PROBLEM 37
On January 1, 2020, Evelyn Company acquired 10,000 shares of GHI Corporation for P600,000. GHI Corporation has the following equity account on January 1, 2020.
10% Non-Cumulative
Ordinary Shares, P50 par value; Authorized shares, 500,000; - 25,000,000
Issued and outstanding, 75,000 shares
Retained Earnings - 10,000,000
On January 1, 2021, Evelyn acquired an additional 5,000 shares of GHI Corporation for P300,000. Theacquisition resulted in 20% ownership, which is considered significant since Evelyn was able to get a seat in the board of directors of GHI Corporation.
GHI Corporation has the following fair values of its shares as follows:
2020 - P65 per share
2021 - P72 per share
GHI Corporation reported the following at year-end:
Net Income Dividends
2020 P5,000,000 P2,000,000
2021 6,500,000 3,000,000
Requirements:
1. Prepare the necessary
2. What is the carrying value of the investment on December 31, 2020? December 31, 2021?
3. How much is the income from investment in 2020? 2021?
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