Focus company accounts for its 10% interest in Bee Company using the cost method. This investment was acquired for P 4,000,000 on January 1, 2021. On January 1, 2022, Focus acquired an additional 20% interest in Bee for P10,000,000. This acquisition cost was equal to the carrying amount of the net assets acquired. On the same date, the fair value of Bee's net assets equaled carrying amount. For the years ended December 31.2021 and 2022, Bee has declared dividends of P2,000,000 and 3,000,000 respectively. The investee has also reported a net income of P6,000,000 for year 2021 and P6,500,000 for year 2022. What is the carrying amount of the investment in associate on December 31, 2022?
Focus company accounts for its 10% interest in Bee Company using the cost method. This investment was acquired for P 4,000,000 on January 1, 2021. On January 1, 2022, Focus acquired an additional 20% interest in Bee for P10,000,000. This acquisition cost was equal to the carrying amount of the net assets acquired. On the same date, the fair value of Bee's net assets equaled carrying amount. For the years ended December 31.2021 and 2022, Bee has declared dividends of P2,000,000 and 3,000,000 respectively. The investee has also reported a net income of P6,000,000 for year 2021 and P6,500,000 for year 2022. What is the carrying amount of the investment in associate on December 31, 2022?
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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Transcribed Image Text:Focus company accounts for its 10% interest in Bee Company using the cost method. This investment
was acquired for P 4,000,000 on January 1, 2021. On January 1, 2022, Focus acquired an additional
20% interest in Bee for P10,000,000. This acquisition cost was equal to the carrying amount of the net
assets acquired. On the same date, the fair value of Bee's net assets equaled carrying amount. For the
years ended December 31,2021 and 2022, Bee has declared dividends of P2,000,000 and 3.000,000
respectively. The investee has also reported a net income of P6,000,000 for year 2021 and P6,500,000
for year 2022. What is the carrying amount of the investment in associate on December 31, 2022?
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