On July 1, 2020, GREEN Company acquired 20% of the outstanding ordinary shares of another entity for ₱5,000,000. The carrying amount of the acquired shares was ₱4,000,000. The excess of cost over the carrying amount was attributable to an identifiable intangible asset which was undervalued on the investee’s statement of financial position and which had a remaining useful life of 5 years. The investee reported net income of ₱6,000,000 for 2020 and paid cash dividends of ₱1,000,000 on ordinary shares and issued 10% stock dividend on December 31, 2020. 1. What amount of investment income should be reported by GREEN for 2020? a. ₱ 500,000 b. ₱ 800,000 c. ₱ 1,000,000 d. ₱ 300,000 2. What is the carrying amount of the investment in associate on December 31, 2020? a. ₱ 5,800,000 b. ₱ 5,400,000 c. ₱ 5,300,000 d. ₱ 5,900,000 The answer for #2 is letter C (5,300,000) but I am unsure of the solution for this. May I ask for your help with these questions, thank you!
On July 1, 2020, GREEN Company acquired 20% of the outstanding ordinary shares of another entity for ₱5,000,000. The carrying amount of the acquired shares was ₱4,000,000. The excess of cost over the carrying amount was attributable to an identifiable intangible asset which was undervalued on the investee’s statement of financial position and which had a remaining useful life of 5 years. The investee reported net income of ₱6,000,000 for 2020 and paid cash dividends of ₱1,000,000 on ordinary shares and issued 10% stock dividend on December 31, 2020. 1. What amount of investment income should be reported by GREEN for 2020? a. ₱ 500,000 b. ₱ 800,000 c. ₱ 1,000,000 d. ₱ 300,000 2. What is the carrying amount of the investment in associate on December 31, 2020? a. ₱ 5,800,000 b. ₱ 5,400,000 c. ₱ 5,300,000 d. ₱ 5,900,000 The answer for #2 is letter C (5,300,000) but I am unsure of the solution for this. May I ask for your help with these questions, thank you!
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On July 1, 2020, GREEN Company acquired 20% of the outstanding ordinary shares of another entity for ₱5,000,000. The carrying amount of the acquired shares was ₱4,000,000. The excess of cost over the carrying amount was attributable to an identifiable intangible asset which was undervalued on the investee’s
1. What amount of investment income should be reported by GREEN for 2020?
a. ₱ 500,000
b. ₱ 800,000
c. ₱ 1,000,000
d. ₱ 300,000
2. What is the carrying amount of the investment in associate on December 31, 2020?
a. ₱ 5,800,000
b. ₱ 5,400,000
c. ₱ 5,300,000
d. ₱ 5,900,000
The answer for #2 is letter C (5,300,000) but I am unsure of the solution for this. May I ask for your help with these questions, thank you!
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