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Compute the net increase or decrease in the company

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Reference no: EM132744623

JAGUAR CORP, a local company in the Philippines purchased a 30% interest of AMERICAN COMPANY, a foreign entity for FC50,000 on account on January 1, 2017. The company settled the account on March 1, 2017.

  • On January 1, the book values of AMERICAN COMPANY approximated their fair values. During the year, AMERICAN COMPANY declared a FC7,000 cash dividend on July 1, 2017 payable on August 31, 2017 and a FC3,500 cash dividend on November 1, 2017 payable on January 31, 2018.
  • AMERICAN COMPANY also reports net income of FC20,000. The peso equivalent of the foreign currencies on their respective dates are as follows; January 1, 2017, P45; March 1,2017, 44; July 1, 2017, P41.50; August 31, 2017, P42.10; November 1, 2017, P42; December 31, 2017, P40; January 31, 2018 P41 and the average for the year 2017, P43. (FC = FOREIGN CURRENCY; P= PHILIPIINE PESO)

Problem 1: Compute the net increase or decrease in the company's current earnings because of the investment AMERICAN COMPANY.

a) 49,160
b) 258,000
c) 289,160
d) 307,160

Reference no: EM132744623

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