PROBLEM 32Guillen Company acquired 30% of ABC Corporations share for P8,000,000 on July 1,2020. ABC Corporation's identifiable net assets on the date of acquisition areP20,000,000. Guillen believes that the investee has known goodwill and the fair valueof the corporation's net assets is the same as its carrying amount except for thefollowing:a Equipment is undervalued by P2.000.000.b. Inventory's fair value is P2,000.000 greater than its carrying amount.The equipment has a remaining life of 4 years and depreciated using the straight-linemethod. At the end of 2020, all inventories at the acquisition date are entirely sold.On November 30, ABC Corporation pays a P2,000.000 dividend to its shareholders.During the year, ABC Corporation reported a net income of P5,000,000, 40% of thesewere earned in the first half of the year. The fair value of ABC Corporation's shares heldby Guillen at the end of 2020 is P8,250.000.Requirements:1. Prepare the necessary jourmal entries to record the above transactions.2 Compute the carrying value of the investment in associates on December 31, 2020.3. Suppose that on November 30, 2020, ABC Corporation revalued its Land thatresulted in a revaluation surplus of P5,000.000. Prepare jourmal entry in thebook of Guillen Company to record the changes in the equity of ABCCorporations as a result of the revaluation.4. Using the information in requirement no. 3, compute the carrying value of theinvestment in associates on December 31, 2020.

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Requirements: 1 Prepare the necessary joumal entries to record the above transactions. 2 Compute the carying value of the investment in associates on December 31, 2020. 3. Suppose that on November 30, 2020, ABC Corporation revalued its Land that resulted in a revaluation surplus of P5,000.000. Prepare joumal entry in the book of Guillen Company to record the changes in the equity of ABC Corporations as a result of the revaluation. 4. Using the information in requirement no. 3, compute the carrying value of the investment in associates on December 31, 2020.

Requirements: 1 Prepare the necessary joumal entries to record the above transactions. 2 Compute the carying value of the investment in associates on December 31, 2020. 3. Suppose that on November 30, 2020, ABC Corporation revalued its Land that resulted in a revaluation surplus of P5,000.000. Prepare joumal entry in the book of Guillen Company to record the changes in the equity of ABC Corporations as a result of the revaluation. 4. Using the information in requirement no. 3, compute the carrying value of the investment in associates on December 31, 2020.

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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