How much was the gain or loss on sale of investment on January 1, 2020? a. P1,575 loss b. P1,575 gain c. P4,325 loss d. P4.325 gain What was the carrying amount of the remaining equity investment at December 31, 2020?
On July 1, 2019, Jude Company purchased 10,000 shares of Rigby Company
ordinary shares for P510,000 plus broker's fees of P5,100. The shares represented
25% of the outstanding shares of Rigby and Jude has an ability to exercise
significant Influence over the financial and operating policies of Rigby. The
acquisition cost reflected book value of the investee's net assets as of that date.
Rigby reported profit of P850,000 (evenly earned) for the year ended December
31, 2019. At December 31, 2019, Rigby declared and paid cash dividends of
P320,000.
At January 1, 2020, Jude Company sold one-half of the investment in Rigby for
P275,000 less broker's fees of P2,750. Jude Company does not have the intention
to dispose the remaining securities in the immediate future. For the year ended
December 31, 2020, Rigby reported profit of P980,000 and declared and paid cash
dividends of P450.000.
Market values per share of Rigby ordinary shares were as follows:
December 31, 2019 - P55
December 31, 2020 - P49
How much was the gain or loss on sale of investment on January 1, 2020?
a. P1,575 loss
b. P1,575 gain
c. P4,325 loss
d. P4.325 gain
What was the carrying amount of the remaining equity investment at December
31, 2020?
a. P275,000
b. P270,675
c. P250,000
d. P245,000
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