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Problem 2.4.1: Name: Jolina C. Pasahol Block: B Time: 03:00 - 04:30 MT A. Cost Model

This document contains a problem set regarding different accounting models for investments in subsidiaries. It shows the journal entries for a) the cost model, b) two fair value models using fair value through profit or loss (FVPL) and fair value through other comprehensive income (FVOCI), and c) the equity method. Under each model, investments are made in the subsidiary through cash contributions and dividends are received, with fair value models also recognizing unrealized gains and the equity method recognizing the investor's share of the subsidiary's net income.

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Alexis King
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86 views2 pages

Problem 2.4.1: Name: Jolina C. Pasahol Block: B Time: 03:00 - 04:30 MT A. Cost Model

This document contains a problem set regarding different accounting models for investments in subsidiaries. It shows the journal entries for a) the cost model, b) two fair value models using fair value through profit or loss (FVPL) and fair value through other comprehensive income (FVOCI), and c) the equity method. Under each model, investments are made in the subsidiary through cash contributions and dividends are received, with fair value models also recognizing unrealized gains and the equity method recognizing the investor's share of the subsidiary's net income.

Uploaded by

Alexis King
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Problem 2.4.

1
Name: Jolina C. Pasahol Block: B Time: 03:00 - 04:30 MT

a. Cost Model
Investment in subsidiary 500,000
Cash 500,000

Investment in subsidiary 40,000


Cash 40,000

Dividends receivable 44,000


Dividend income 44,000

Investment in subsidiary balance 540,000

b. (1) Fair Value Model - FVPL


Investment in subsidiary 500,000
Cash 500,000

Expenses 40,000
Cash 40,000

Dividends receivable 44,000


Dividend income 44,000

Investment in subsidiary 160,000


Unrealized Gain 160,000

Investment in subsidiary balance 660,000

(2) Fair Value Model - FVOCI


Investment in subsidiary 500,000
Cash 500,000

Investment in subsidiary 40,000


Cash 40,000

Dividends receivable 44,000


Dividend income 44,000

Investment in subsidiary 120,000


Unrealized Gain-OCI 120,000

Investment in subsidiary balance 660,000


c. Equity Method
Investment in subsidiary 500,000
Cash 500,000

Investment in subsidiary 40,000


Cash 40,000

Dividends receivable 44,000


Investment in subsidiary 44,000

Investment in subsidiary 72,000


Investment Income 72,000

Investment Income 800


Investment in subsidiary 800

Investment in subsidiary balance 567,200

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