White purchased 10% of an investee's 100,000 outstanding ordinary shares on January 1, 2022 for P1,000,000. On October 31, 2022, White company purchased 20,000 additional shares of the investee for P3,000,000. On the same date, the fair value of the 10% interest was P1,400,000. The fair value of the net assets of the investee is equal to carrying amount except for an equipment whose fair value exceeds carrying amount by P640,000. The equipment has a remaining life of 5 years. The investee had not issued any additional shares for the year. The investee reported net income of P8,000.000 for the current year and paid P500,000 dividends. What amount should be reported on December 31 as investment in associate?
White purchased 10% of an investee's 100,000 outstanding ordinary shares on January 1, 2022 for P1,000,000. On October 31, 2022, White company purchased 20,000 additional shares of the investee for P3,000,000. On the same date, the fair value of the 10% interest was P1,400,000. The fair value of the net assets of the investee is equal to carrying amount except for an equipment whose fair value exceeds carrying amount by P640,000. The equipment has a remaining life of 5 years. The investee had not issued any additional shares for the year. The investee reported net income of P8,000.000 for the current year and paid P500,000 dividends. What amount should be reported on December 31 as investment in associate?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 24E
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![White purchased 10% of an investee's 100,000 outstanding ordinary
shares on January 1, 2022 for P1,000,000. On October 31, 2022, White
company purchased 20,000 additional shares of the investee for
P3,000,000. On the same date, the fair value of the 10% interest was
P1,400,000. The fair value of the net assets of the investee is equal to
carrying amount except for an equipment whose fair value exceeds
carrying amount by P640,000. The equipment has a remaining life of 5
years. The investee had not issued any additional shares for the year. The
investee reported net income of P8,000.000 for the current year and paid
P500,000 dividends. What amount should be reported on December 31 as
investment in associate?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa942f44f-8ff6-4c0e-97a2-295b72c49cae%2F7fc9797d-196b-4209-ad89-557d9dcfbb7a%2Fytitih9_processed.png&w=3840&q=75)
Transcribed Image Text:White purchased 10% of an investee's 100,000 outstanding ordinary
shares on January 1, 2022 for P1,000,000. On October 31, 2022, White
company purchased 20,000 additional shares of the investee for
P3,000,000. On the same date, the fair value of the 10% interest was
P1,400,000. The fair value of the net assets of the investee is equal to
carrying amount except for an equipment whose fair value exceeds
carrying amount by P640,000. The equipment has a remaining life of 5
years. The investee had not issued any additional shares for the year. The
investee reported net income of P8,000.000 for the current year and paid
P500,000 dividends. What amount should be reported on December 31 as
investment in associate?
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