At the beginning of 2023, SOLOMON Company acquired 35% of the common
shares of another entity for P6,400,000. As of the same date, the associate's
net assets had fair value of P19,000,000. For the year 2023, the associate
reported net income of P2,900,000 and paid the Company dividends
amounting to P840,000. As of the end of 2023, the shares had a total fair
value of P6,700,000. The carrying amount of the investment as of December
31, 2023
Correct answer : P 6 825 000
On January 1, 2023, ROSE Company invested in 100,000 common
shares of LOUIE Company, which has a total of 1,000,000 outstanding
common shares, for P10,000,000. As of the same date, ROSE holds the only
convertible debt of LOUIE which will give the former 200,000 additional
common shares to be issued by the latter. This potential voting right is
currently exercisable, but ROSE Company has no intentions of exercising it.
For the year 2023, LOUIE Company reported net loss of P800,000 and paid
dividends of P2,400,000. The carrying amount of the investment as of
December 31, 2023 shall be P 9 680 000
On January 2, 2020, Tuao Company purchased 10% of Abulug Company’s
outstanding ordinary shares for P20,000,000. Tuao is the largest single
shareholder in Abulug and this gives Tuao the power to participate in the
financial and operating policy decisions of the Abulug but is not control or
joint control over those policies. Abulug reported profit of P10,000,000 and
paid dividend of P4,000,000. What should be the balance in Tuao’s
investment in Abulug Company at the end of 2020? P 20,600,000
Kobe Company owns 50% of Lakers Company’s cumulative preference
shares and 30% of its ordinary shares. Lakers’ shares outstanding at
December 31, 2020 include P10,000,000 of 10% cumulative preference
shares and P40,000,000 of ordinary shares. Lakers reported profit of
P8,000,000 for the year ended December 31, 2020. Lakers declared and paid
P1,500,000 preference share dividends during 2020. Lakers paid no
preference share dividends during 2019. How much is the total amount to be
recognized by Kobe Company in its 2020 profit or loss related to these
investments? P2,850,000
On January 1, 2023, ZEALAND Company has an investment in associate with P3,500,000 carrying
amount. This investment represents 35% ownership interest over the associate. The Company does not
maintain any other interest in the associate.
For the years 2023 to 2024, the associate reported the following financial performance:
2023: P6,500,000 loss
2024: P4,400,000 loss
2025: P 2,300,000 profit
Share in the associate's loss for the year 2024 shall be: P1,225,000
On January 1, 2023, ZEALAND Company has an investment in associate with P3,500,000 carrying
amount. This investment represents 35% ownership interest over the associate. The Company does not
maintain any other interest in the associate. For the years 2023 to 2024, the associate reported the
following financial performance:
2023: P6,500,000 loss
2024: P4,400,000 loss
2025: P 2,300,000 profit
Share in the associate's loss for the year 2025 shall be; P490,000
On July 1, 2016, Cleopatra Corporation acquired 25% of the shares of Marcus, Inc. for P1,000,000. At
that date, the equity of Marcus was P4,000,000, with all the identifiable assets and liabilities being
measured at amounts equal to fair value. The table below shows the profits and losses made by Marcus
during 2016 to 2020:
2016: P 200,000
2017: (2,000,000)
2018: (2,500,000)
2019: 160,000
2020: 300,000
Statement I: The ‘share of profit of associate’ should Cleopatra report in its 2019 profit or loss is P 40
000.
Statement II. The ‘share of profit of associate’ should Cleopatra report in its 2020 profit or loss is
P15,000. Only Statement II is correct
Entity A has a 10% interest in Entity B, which it acquired in 2017 for P300,000. This
investment was a financial asset measured at fair value in accordance with PFRS 9. In March 2020, Entity
A acquires a further 15% interest in Entity B for P720,000 (its then fair value), giving Entity A significant
influence over Entity B. Transaction costs of P50,000 were incurred for the 15% interest. The original
10% interest had a fair value of P480,000 at that date. In accordance with PIC Q&A No. 2018-07 as
amended, the ‘cost’ of the investment in associate is
P1,250,000
On January 1, 2023, LEICESTER Company acquired 30,000 of SWANSEA Company's 120,000 issued shares
for P6,000,000. Out of these 120,000 issued shares, 20,000 shares are held by SWANSEA Company as
treasury shares. The fair value of the underlying net assets of SWANSEA was P22,500,000. SWANSEA
Company reported the following amounts:
Profit or Loss
2023: 5,000,000
2024: (P1,125,000)
Other comprehensive income (loss)
2023: (375,000)
2024: 1,875,000
Dividends
2023: 3,125,000
2024: 1,700,000
The fair values of each share were P215.00 and P222.50 as of December 31, 2023 and 2024,
respectively.
The carrying amount of the investment as of December 31, 2023 shall be :P7 200 000
On March 1, 2023, GOAT Company acquired 35% of the voting rights of an
associate for P4,200,000. For the year 2023, the associate reported net
income of P3,770,000, which was earned evenly during the year, except for
P250,000 gain on sale of land on January 31, 2023 and P400,000 gain on sale
of building on October 1, 2023. In addition, the associate also declared
dividends of P460,000 on August 1, 2023.GOAT Company's share in the
associate's 2023 profit or loss shall be: P1,050,000
On March 1, 2023, GOAT Company acquired 35% of the voting rights of an
associate for P4,200,000. For the year 2023, the associate reported net
income of P3,770,000, which was earned evenly during the year, except for
P250,000 gain on sale of land on January 31, 2023 and P400,000 gain on sale
of building on October 1, 2023. In addition, the associate also declared
dividends of P460,000 on August 1, 2023. Carrying amount of the investment
in associate as of December 31, 2023 shall be a
P5,089,000
