Use the PFRS for SMEs) On 31 December 20X1 entity A acquired 30 per cent of the ordinary shares that carry voting rights of entity B for ₱100,000. Entity A incurred transaction costs of ₱1,000 in acquiring these shares. Entity A has significant influence over entity B. Entity A uses the cost model to account for its investments in associates. In January 20X2 entity B declared and paid a dividend of ₱20,000 out of profits earned in 20X1. No further dividends were paid in 20X2, 20X3 or 20X4. A published price quotation does not exist for entity B. At 31 December 20X1, 20X2 and 20X3, in accordance with Section 27 Impairment of Assets, management assessed the fair values of its investment in entity B as ₱102,000, ₱110,000 and ₱90,000 respectively. Costs to sell are estimated at ₱4,000 throughout. Entity A measures its investment in entity B on 31 December 20X1, 20X2 and 20X3 respectively at: a. ₱100,000, ₱100,000, ₱100,000. b. ₱95,000, ₱95,000, ₱86,000. c. ₱98,000, ₱106,000, ₱86,000. d. ₱98,000, ₱101,000, ₱86,000. e. ₱102,000, ₱110,000, ₱90,000.
Use the PFRS for SMEs) On 31 December 20X1 entity A acquired 30 per cent of the ordinary shares that carry voting rights of entity B for ₱100,000. Entity A incurred transaction costs of ₱1,000 in acquiring these shares. Entity A has significant influence over entity B. Entity A uses the cost model to account for its investments in associates. In January 20X2 entity B declared and paid a dividend of ₱20,000 out of profits earned in 20X1. No further dividends were paid in 20X2, 20X3 or 20X4. A published price quotation does not exist for entity B. At 31 December 20X1, 20X2 and 20X3, in accordance with Section 27 Impairment of Assets, management assessed the fair values of its investment in entity B as ₱102,000, ₱110,000 and ₱90,000 respectively. Costs to sell are estimated at ₱4,000 throughout. Entity A measures its investment in entity B on 31 December 20X1, 20X2 and 20X3 respectively at: a. ₱100,000, ₱100,000, ₱100,000. b. ₱95,000, ₱95,000, ₱86,000. c. ₱98,000, ₱106,000, ₱86,000. d. ₱98,000, ₱101,000, ₱86,000. e. ₱102,000, ₱110,000, ₱90,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Use the PFRS for SMEs) On 31 December 20X1 entity A acquired 30 per cent of the ordinary shares that carry voting rights of entity B for ₱100,000. Entity A incurred transaction costs of ₱1,000 in acquiring these shares. Entity A has significant influence over entity B. Entity A uses the cost model to account for its investments in associates. In January 20X2 entity B declared and paid a dividend of ₱20,000 out of profits earned in 20X1. No further dividends were paid in 20X2, 20X3 or 20X4. A published price quotation does not exist for entity B. At 31 December 20X1, 20X2 and 20X3, in accordance with Section 27 Impairment of Assets, management assessed the fair values of its investment in entity B as ₱102,000, ₱110,000 and ₱90,000 respectively. Costs to sell are estimated at ₱4,000 throughout. Entity A measures its investment in entity B on 31 December 20X1, 20X2 and 20X3 respectively at:
a. ₱100,000, ₱100,000, ₱100,000.
b. ₱95,000, ₱95,000, ₱86,000.
c. ₱98,000, ₱106,000, ₱86,000.
d. ₱98,000, ₱101,000, ₱86,000.
e. ₱102,000, ₱110,000, ₱90,000.
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