Cloud Co. acquired an investment in Sky Co., a joint venture, for P100,000, incurring transaction costs of P1,000. Cloud Co. determined that it has joint control over Sky. Cloud Co. uses the PFRS for SMES and elects the cost model for its investments in joint ventures. The investment's fair values were P102,000, P110,000 and P90,000 on December 31, 20x1, 20x2 and 20x3, respectively. Costs to sell were estimated at P4,000 throughout. Cloud Co. recognizes in its profit or loss which of the following amounts? gain (loss) 20x1 20x2 20x3 a. 0 b. (1,000) с. (3,000) d. (3,000) 8,000 8,000 3,000 (20,000) (20,000) (15,000)

Cloud Co. acquired an investment in Sky Co., a joint venture, for P100,000, incurring transaction costs of P1,000. Cloud Co. determined that it has joint control over Sky. Cloud Co. uses the PFRS for SMES and elects the cost model for its investments in joint ventures. The investment's fair values were P102,000, P110,000 and P90,000 on December 31, 20x1, 20x2 and 20x3, respectively. Costs to sell were estimated at P4,000 throughout. Cloud Co. recognizes in its profit or loss which of the following amounts? gain (loss) 20x1 20x2 20x3 a. 0 b. (1,000) с. (3,000) d. (3,000) 8,000 8,000 3,000 (20,000) (20,000) (15,000)

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

Section: Chapter Questions

Problem 37RQSC

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On January 1, 2022, Entity A, a small-medium enterprise, invested P400,000 for a 30% interest in a joint venture. Assume the INDEPENDENT CASES: Case 1: For the year ended December 31, 2022, the joint venture reported a net income of P150,000 and declared dividends of P40,000. The fair value of the investment was P325,000 and the cost to sell was P15,000. There was no public price quotation for the joint venture. Entity A opted to use the cost model, what is the amount to be reported in profit or loss for the year ended December 31, 2022? Entity A opted to use the cost model, what is the balance of the Investment in Joint Venture account to be reported at December 31, 2022?
On January 1, 2022, Entity A, a small-medium enterprise, invested P400,000 for a 30% interest in a joint venture. Assume the INDEPENDENT CASES: For the year ended December 31, 2022, the joint venture reported a net income of P300,000 and declared dividends of P90,000. The fair value of the investment was P550,000, and the cost to sell was P50,000. There was a public price quotation for the joint venture. Entity A opted to use the cost model, what is the amount to be reported in profit or loss for the year ended December 31, 2022? Entity A opted to use the cost model, what is the balance of the Investment in Joint Venture account to be reported at December 31, 2022?
On January 1, 2022, Entity A, a small-medium enterprise, invested P400,000 for a 30% interest in a joint venture. Assume the INDEPENDENT CASES: For the year ended December 31, 2022, the joint venture reported a net loss of P100,000. The fair value of the investment was P390,000 and the cost to sell was P25,000. There was a public price quotation for the joint venture. Entity A opted to use the equity model. What is the balance of the Investment in Joint Venture account to be reported at December 31, 2022?
Senpai Company acquires 15% of Kohai Company’s common stock for P600,000 cash and carries the investment using the cost model. A few months later, Senpai purchases another 60% of Kohai Company’s stock for P2,592,000. At that date, Kohai Company reports identifiable assets with a book value of P4,680,000 and a fair value of P6,120,000, and it has liabilities with a book value and fair value of P2,280,000. The fair value of the 25% non-controlling interest in Kohai Company is P1,080,000. Compute the amount of goodwill, using full-goodwill or fair value basis approach.
Senpai Company acquires 15% of Kohai Company’s common stock for P600,000 cash and carries the investment using the cost model. A few months later, Senpai purchases another 60% of Kohai Company’s stock for P2,592,000. At that date, Kohai Company reports identifiable assets with a book value of P4,680,000 and a fair value of P6,120,000, and it has liabilities with a book value and fair value of P2,280,000. The fair value of the 25% non-controlling interest in Kohai Company is P1,080,000. Compute the amount of goodwill, using full-goodwill or fair value basis approach: Group of answer choices None of the given P360,000 None P480,000
Senpai Company acquires 15% of Kohai Company’s common stock for P600,000 cash and carries the investment using the cost model. A few months later, Senpai purchases another 60% of Kohai Company’s stock for P2,592,000. At that date, Kohai Company reports identifiable assets with a book value of P4,680,000 and a fair value of P6,120,000, and it has liabilities with a book value and fair value of P2,280,000. The fair value of the 25% non-controlling interest in Kohai Company is P1,080,000. Compute the amount of goodwill, using full-goodwill or fair value basis approach: a. 480,000 b. 360,000 c. None of the given d. None
Senpai Company acquires 15% of Kohai Company’s common stock for P600,000 cash and carries the investment using the cost model. A few months later, Senpai purchases another 60% of Kohai Company’s stock for P2,592,000. At that date, Kohai Company reports identifiable assets with a book value of P4,680,000 and a fair value of P6,120,000, and it has liabilities with a book value and fair value of P2,280,000. The fair value of the 25% non-controlling interest in Kohai Company is P1,080,000. Compute for the amount of goodwill, using partial goodwill or proportionate basis approach: a. None b. 480,000 c. None of the given d. 360,000
Father Corporation (FC) acquires 20% ownership interest in Son Corporation (SC) on January 1, 202X, for P1,750,000 cash, which is the fair value of the investment at that date. FC has concluded that it does not have a significant influence over SC. At the same date, the fair and carrying values of SC’s identifiable assets is P5,000,000 and P3,000,000. The identifiable assets include land, which has fair and carrying values of P4,000,000 and P3,000,000, respectively.For the year ended December 31, 202X, SC reported a profit of P3,000,000 but did not pay any dividends. Moreover, the fair value of SC’s land increases by P1,500,000. However, the carrying amount of the land remains unchanged at P3,000,000. Given below is the Statement of Financial Position (SFP) of SC, together with the fair values of the identifiable assets, at December 31, 202X: Carrying Amount Fair ValueCash & Receivables 4,000,0004,000,000Land. 3,000,000.…
Father Corporation (FC) acquires 20% ownership interest in Son Corporation (SC) on January 1, 202X, for P1,750,000 cash, which is the fair value of the investment at that date. FC has concluded that it does not have a significant influence over SC. At the same date, the fair and carrying values of SC’s identifiable assets is P5,000,000 and P3,000,000. The identifiable assets include land, which has fair and carrying values of P4,000,000 and P3,000,000, respectively. For the year ended December 31, 202X, SC reported a profit of P3,000,000 but did not pay any dividends. Moreover, the fair value of SC’s land increases by P1,500,000. However, the carrying amount of the land remains unchanged at P3,000,000. Given below is the Statement of Financial Position (SFP) of SC, together with the fair values of the identifiable assets, at December 31, 202X: Carrying Amount Fair Value Cash and Receivables 4,000,000 4,000,000 Land 3,000,000 5,500,000…
Honesty Company, an SME, acquired 30% interest of the equity of Integrity Company for P500,000 plus a transaction cost of P10,000 on January 1, 2022. At the end of the year, Integrity reported a profit of P400,000 and declared dividends of P150,000. The dividends were paid on January 15, 2023.Published price quotation does not exist for Integrity. Using appropriate valuation techniques, Honesty determined the fair value of its investment in Integrity at December 31, 2022 as P560,000. Costs to sell are estimated at 3% of the fair value of the investment. Answer the following questions related to this 1 problem: a. Using the Equity Model, how much is Carrying Value of the Investment at December 31, 2022? b. Using the Cost Model, how much is the amount to be reported by Honesty in the profit or loss for 2022? c. Using the Fair Value Model, how much is Carrying Value of the Investment at December 31, 2022? __________________
Honesty Company, an SME, acquired 30% interest of the equity of Integrity Company for P500,000 plus a transaction cost of P10,000 on January 1, 2022. At the end of the year, Integrity reported a profit of P400,000 and declared dividends of P150,000. The dividends were paid on January 15, 2023.Published price quotation does not exist for Integrity. Using appropriate valuation techniques, Honesty determined the fair value of its investment in Integrity at December 31, 2022 as P560,000. Costs to sell are estimated at 3% of the fair value of the investment. Answer the following subquestion relating to this one problem: a. Using the Cost Model, how much is Carrying Value of the Investment at December 31, 2022? b. Using the Equity Model, how much is the amount to be reported by Honesty in the profit or loss for 2022? _________________&
On January 1, 20x1, Ai Inc. acquired all the assets and liabilities of Pon Corp. forP1,200,000. Pon Corpassets and liabilities have a fair value of P2,500,000 andP1,300,000, respectively.Additional Information:● Ai is the exclusive distributor of Pon's products. The agreement has aremaining term of five years. The contract does not have any cancellationclause.● The agreement has a fair value of P400,000, of which 30% is "at the market.”The off-market component is unfavorable to the Ai Inc.● No assets and liabilities related to the contract were recognized.How much is the "gain of bargain purchase" to be recognized by Ai Inc. as a result ofthe business combination?