At the beginning of the current year, Big Company purchased 25% of the outstanding ordinary shares of Small company paying P5,000,000. On this date, the carrying amount of the net assets of Small equaled to P16,000,000. The difference was attributed to an excess of fair value over carrying amount of an equipment amounting to P3,000,000. The equipment has a remaining useful life of five years. In addition, Small's inventory had a carrying amount of P3,400,000 but was determined to have a fair value of P4,400,000. 75% of the inventory was sold during the year. At the end of the current year, Small company, reported net income of P1,600,000 and paid cash dividends of P1,000,000. What is the carrying amount of the investment at the end of the year?

At the beginning of the current year, Big Company purchased 25% of the outstanding ordinary shares of Small company paying P5,000,000. On this date, the carrying amount of the net assets of Small equaled to P16,000,000. The difference was attributed to an excess of fair value over carrying amount of an equipment amounting to P3,000,000. The equipment has a remaining useful life of five years. In addition, Small's inventory had a carrying amount of P3,400,000 but was determined to have a fair value of P4,400,000. 75% of the inventory was sold during the year. At the end of the current year, Small company, reported net income of P1,600,000 and paid cash dividends of P1,000,000. What is the carrying amount of the investment at the end of the year?

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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