On January 1, 2019, Aboitiz Corporation acquired 30% of the voting share capital of another entity for P2,000,000 which was equal to the carrying amount of interest acquired. The investee reported net income of P800,000 for 2019 and paid dividend of P500,000 on December 31, 2019. The investee reported net income of P1,000,000 for the six months ended June 30, 2020 and P2,500,000 for the year ended December 31, 2020, but paid no dividend during 2020. On July 1,2020, the investor sold half of the investment for P1,500,000. The fair value of the retained investment was P1,600,000 on July 1, 2020 until January 1, 2021.The retained investment is to be held as nontrading measured at FVTOCI.

On January 1, 2019, Aboitiz Corporation acquired 30% of the voting share capital of another entity for P2,000,000 which was equal to the carrying amount of interest acquired. The investee reported net income of P800,000 for 2019 and paid dividend of P500,000 on December 31, 2019. The investee reported net income of P1,000,000 for the six months ended June 30, 2020 and P2,500,000 for the year ended December 31, 2020, but paid no dividend during 2020. On July 1,2020, the investor sold half of the investment for P1,500,000. The fair value of the retained investment was P1,600,000 on July 1, 2020 until January 1, 2021.The retained investment is to be held as nontrading measured at FVTOCI.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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