On January 1, 2018, La Carm Co. acquired 30,000 shares of Bora Inc.'s 75,000 shares outstanding for P5,000,000. The book value of Bora Inc's identifiable assets on this date was at P14,000,000. All of the assets approximated their fair values, except: Equipment with 5 years remaining useful life which is overvalued by P1,600,000. Land whose fair value exceeds its carrying amount by P500,000. During 2018, Bora Inc. reported a total comprehensive income of P4,000,000 which was net of a foreign exchange gain reported in as other comprehensive loss at P800,000. Bora Inc., also paid. dividends at P1,500,000 at the end of the year, P500,000 of which is acquired div-on. By La Carm Co. The fair market value of the shares as of this date December 31, 2018 is P210 per share.
On January 1, 2018, La Carm Co. acquired 30,000 shares of Bora Inc.'s 75,000 shares outstanding for P5,000,000. The book value of Bora Inc's identifiable assets on this date was at P14,000,000. All of the assets approximated their fair values, except: Equipment with 5 years remaining useful life which is overvalued by P1,600,000. Land whose fair value exceeds its carrying amount by P500,000. During 2018, Bora Inc. reported a total comprehensive income of P4,000,000 which was net of a foreign exchange gain reported in as other comprehensive loss at P800,000. Bora Inc., also paid. dividends at P1,500,000 at the end of the year, P500,000 of which is acquired div-on. By La Carm Co. The fair market value of the shares as of this date December 31, 2018 is P210 per share.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 24E
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How much should be reported in La Casa’s P&L section of the statement of comprehensive income and how much is the carrying value of the investment at the end of 2018?
Transcribed Image Text:On January 1, 2018, La Carm Co. acquired 30,000 shares of Bora Inc.'s 75,000 shares outstanding
for P5,000,000. The book value of Bora Inc's identifiable assets on this date was at P14,000,000. All
of the assets approximated their fair values, except:
Equipment with 5 years remaining useful life which is overvalued by P1,600,000.
Land whose fair value exceeds its carrying amount by P500,000.
During 2018, Bora Inc. reported a total comprehensive income of P4,000,000 which was net of a
foreign exchange gain reported in as other comprehensive loss at P800,000. Bora Inc., also paid
dividends at P1,500,000 at the end of the year, P500,000 of which is acquired div-on. By La Carm Co.
The fair market value of the shares as of this date December 31, 2018 is P210 per share.
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