Problem On January 1, 2020, Jam Company reported investments the following unquoted equity shares: as long-term Dale Company, 5,000 ordinary shares (1% interest) Ever Company, 10,000 ordinary shares ( 2% interest) Fox Company, 25,000 ordinary shares (10% interest) 1,250,000 1,600,000 2,000,000 1. On May 1, 2020, Dale Company issued a 10% share dividend. 2. On November 1, 2020, Dale Company paid a cash dividend of P20 per share. 3. On January 1, 2020, Jam Company paid P5,000,000 fo 50,000 additional ordinary shares of Fox Company which represented a 20% investment in Fox Company. The fair value of all of Fox's identifiable assets net of liabilities was equal to their carrying amount of P20,000,000. Jam Company's initial 10% interest of 25,000 ordinary shares of Fox Company was acquired on January 1, 2019 for P2,000,000. The 10% interest was accounted for under cost method. On January 1, 2020, this l10% existing interest had a fair value of P2,400,000. 4 Fox Company reported net income of P6,000,000 for 2020, and paid dividend of P20 per share on December 31, 2020. Required: a. Compute the goodwill arising from acquisition on January 1, 2020. b. Prepare journal entries for 2020. c. Present the investments in equity securities on December 31, 2020.
Problem On January 1, 2020, Jam Company reported investments the following unquoted equity shares: as long-term Dale Company, 5,000 ordinary shares (1% interest) Ever Company, 10,000 ordinary shares ( 2% interest) Fox Company, 25,000 ordinary shares (10% interest) 1,250,000 1,600,000 2,000,000 1. On May 1, 2020, Dale Company issued a 10% share dividend. 2. On November 1, 2020, Dale Company paid a cash dividend of P20 per share. 3. On January 1, 2020, Jam Company paid P5,000,000 fo 50,000 additional ordinary shares of Fox Company which represented a 20% investment in Fox Company. The fair value of all of Fox's identifiable assets net of liabilities was equal to their carrying amount of P20,000,000. Jam Company's initial 10% interest of 25,000 ordinary shares of Fox Company was acquired on January 1, 2019 for P2,000,000. The 10% interest was accounted for under cost method. On January 1, 2020, this l10% existing interest had a fair value of P2,400,000. 4 Fox Company reported net income of P6,000,000 for 2020, and paid dividend of P20 per share on December 31, 2020. Required: a. Compute the goodwill arising from acquisition on January 1, 2020. b. Prepare journal entries for 2020. c. Present the investments in equity securities on December 31, 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Dale Company, 5,000 ordinary shares (1% interest)
c. Present the investments in equity securities on December
a. Compute the goodwill arising from acquisition on January
On January 1, 2020, Jam Company reported as long-term
2. On November 1, 2020, Dale Company paid a cash dividend
1. On May 1, 2020, Dale Company issued a 10% share
Problem 18-4 (AICPA Adapted)
as long-term
Ever Company, 10,000 ordinary shares ( 2% interest)
Fox Company, 25,000 ordinary shares (10% interest)
1,250,000
1,600,000
2,000,000
dividend.
of P20 per share.
3. On January 1, 2020, Jam Company paid P5,000,000 for
50,000 additional ordinary shares of Fox Company which
represented a 20% investment in Fox Company.
The fair value of all of Fox's identifiable assets net of
liabilities was equal to their carrying amount of
P20,000,000.
Jam Company's initial 10% interest of 25,000 ordinary
shares of Fox Company was acquired on January 1, 2019
for P2,000,000.
The 10% interest was accounted for under cost method.
On January 1, 2020, this 10% existing interest had a fair
value of P2,400,000.
4 Fox Company reported net income of P6,000,000 for 2020,
and paid dividend of P20 per share on December 31, 2020.
Required:
1, 2020.
b. Prepare journal entries for 2020.
31, 2020.
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