Solution-What amount of investment revenue should be

What amount of investment revenue should be reported

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Question - On December 4, 20X0, ABC Corporation paid P1,296,000 for 40,000 ordinary shares of XYZ Company. The investment represents a 30% interest in the net assets of XYZ and gave ABC the ability to exercise significant influence over XYZ's operating and financial policy decisions. ABC received dividends of P1 per share on December 4, 20X0, and XYZ reported net income of P640,000 for the year ended December 31, 20X0. The market value of XYZ's ordinary shares at December 31, 20X0, was P32 per share. The book value of XYZ's net assets was P3,200,000, and:

The fair value of XYZ's depreciable assets, with an average remaining useful life of 8 years, exceeded their book value by P320,000.

The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill.

What amount of investment revenue should be reported in ABC's income statement for the year ended December 31, 20X0?

Reference no: EM132977931

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What amount of investment revenue should be reported

Reference no: EM132977931

Reference no: EM132977931

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