andonededS3.year-Problem 17-5 (IAA)he investment atyear.Alpha Company acquired 20,000 shares of Beta CompanyJanuary 1, 2021 at P120 per share. Beta Company had 80,000shares outstanding with a carrying amount of P8,000,000.The difference between the carrying amount and fair value ofon January 1, 2021 is attributable to a broadcastBeta Companylicense intangible asset.Alpha Company has a 20-year straight line amortization policyfor the broadcast license.Beta Company recorded earnings of P3,600,000 and P3,900,000for 2021 and 2022, respectively, and paid per-share dividend ofP16 in 2021 and P20 in 2022.Required:1. Compute the investment income for 2021.2. Compute the investment income for 2022.3. Determine the carrying amount of the investment inassociate on December 31, 2022.515

Amortization refers to the process of gradually paying off a debt or an expense over a period of…

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Business

Accounting

Problem nha Company acquired 20 2021 at P120.

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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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

and
on
ed
ed
S
3.
year-
Problem 17-5 (IAA)
he investment at
year.
Alpha Company acquired 20,000 shares of Beta Company
January 1, 2021 at P120 per share. Beta Company had 80,000
shares outstanding with a carrying amount of P8,000,000.
The difference between the carrying amount and fair value of
on January 1, 2021 is attributable to a broadcast
Beta Company
license intangible asset.
Alpha Company has a 20-year straight line amortization policy
for the broadcast license.
Beta Company recorded earnings of P3,600,000 and P3,900,000
for 2021 and 2022, respectively, and paid per-share dividend of
P16 in 2021 and P20 in 2022.
Required:
1. Compute the investment income for 2021.
2. Compute the investment income for 2022.
3. Determine the carrying amount of the investment in
associate on December 31, 2022.
515

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