an authorized share capital of P10,000,000 consisting of 100,000On January 1, 2020, Multinational Company was organized withshares of P100 par value, one half of which was immediatelyIn February, the entity acquired a tract of resource land-at aAlso, the entity purchaşed for cash mining equiment ofDuring the year ended December 31, 2020, the entity minedshares of P100 par value, one half of which wassold for cash at P110 per share.immediatelyIn February, the entity acquired a tract of resource landcost of P3,000,000 which was paid in cash.Also, the entity purchased for cash miningP800,000.eqmentofThe geological survey of the resource property indicatedestimated content of 1,000,000 units.an6.90,000 units, of which 85;000 units were sold for a cash priceP50 per unit.The entity paid the following during the year:Mining labor ånd other direct costsAdministrative expenses2,268,000500,000Required:Prepare journal entries including adjustments to record thetransactions.а.b. Prepare an income statement for the year ended December31, 2020.c. Prepare a statement of financial position on December 31,2020.d. Compute the maximum dividend that can legally be declaredby the entity on December 31, 2020.e. Prepare journal entry assuming the maximum dividend 18declared by the 'entity.

Security that symbolizes ownership in a firm seems to be common stock. Common stockholders elect a…

In February, the entity acquired a tract of resource land-at a an authorized share capital of P10,000,000 consisting of 100,000 On January 1, 2020, Multinational Company was órganized with shares of P100 par value, one halt of which was immedio sold for cash at P110 per share. a cost of P3,000,000' which was paid in cash.

In February, the entity acquired a tract of resource land-at a an authorized share capital of P10,000,000 consisting of 100,000 On January 1, 2020, Multinational Company was órganized with shares of P100 par value, one halt of which was immedio sold for cash at P110 per share. a cost of P3,000,000' which was paid in cash.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 23E

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On January 1, 2020 Multinational Company was organized with an authorized share capital of P10,000,000 consisting of 100,000 shares of P100 par value, one half of which was immediately sold for cash at P110 per share. In February, the entity acquired a tract of resource land at a cost of P3,000,000 which was paid in cash. Also, the entity purchased for cash mining equipment of P800,000. The geological survey of the resource property indicated an estimated content of 1,000,000 units. During the year ended December 31, 2020, the entity mined 90,000 units of which 85,000 units were sold for a cash price of P50 per unit. The entity paid the following during the year: Mining labor and other direct costs 2,268,000 Administrative expenses 500,000 Determine: (1)Depletion expense reported in 2020 statement of profit or loss (2)Depreciation expense reported in 2020 statement of profit or loss (3)Dividend declared per share for 2020
On January 1, 2021, Entity F acquired 25% of the shares of Pot, Inc. for P425,000. At this date all identifiable assets and liabilities of Pot, Inc. were recorded at amounts equal to fair value, and the equality of Pot consisted of the following: Share capital P1,000,000 General reserve P300,000 Asset revaluation surplus P200,000 Retained earnings P200,000 In 2021, Pot reported profit of P250,000. P50,000 of the asset revaluation surplus was realized in 2021. Pot paid P40,000 divedend and transferred P30,000 to general reserve. What is the carrying amount of the investment in Pot, Inc. as of December 31,2021? a. P465,000 b. P477,000 c. P482,500 d. P490,000
On January 2, 2021. PABC corporation acquired 75% of the outstanding ordinary shares of SDEF Company for P513,000 cash, excluding direct acquisition costs. The investment was accounted for by the cost method. On January 2, 2021, SDEF’s identifiable net assets (book value and fair value) were P570,000. SDEF’s net income for the year ended December 31, 2021 was P304,000. During 2021, PABC received P21,600 cash dividends from SDEF. There were no other inter-company transactions. The balance of the Non-controlling interest in Net assets of subsidiary account on December 31, 2021 is?
A Company acquired the assets and assumed the liabilities of B Inc. on June 30, 2022. The consideration transferred by the acquirer were as follows: • Cash amounting to P2,000,000. • Issued 10,000 ordinary shares at P10 par with a market price of P15. • Issued 5 year interest bearing bonds payable with a face value of P3,000,000 with a nominal rate of 10% and effective interest of 12%. (use two decimal places for the present value factor) Acquisition related costs incurred were as follows: • Legal fees amounting to P120,000, 70% of which is not yet paid. • Share issue costs paid amounted to P15,000. • Bond Issue costs paid amounting to P120,000. The Balance Sheet of the two entities before acquisition were as follows: A Company B Inc.Total Assets 16,500,000 5,235,000Total Liabilities 2,500,000 500,000Ordinary Shares 5,000,000 1,250,000Share premium 1,500,000 750,000Retained Earnings 6/30/22 7,500,000 2,735,000It was determined that the book value of the assets and liabilities of the…
A Company acquired the assets and assumed the liabilities of B Inc. on June 30, 2022. The consideration transferred by the acquirer were as follows: • Cash amounting to P2,000,000. • Issued 10,000 ordinary shares at P10 par with a market price of P15. • Issued 5 year interest bearing bonds payable with a face value of P3,000,000 with a nominal rate of 10% and effective interest of 12%. (use two decimal places for the present value factor) Acquisition related costs incurred were as follows: • Legal fees amounting to P120,000, 70% of which is not yet paid. • Share issue costs paid amounted to P15,000. • Bond Issue costs paid amounting to P120,000. The Balance Sheet of the two entities before acquisition were as follows: A Company B Inc.Total Assets 16,500,000 5,235,000Total Liabilities 2,500,000 500,000Ordinary Shares 5,000,000 1,250,000Share premium 1,500,000 750,000Retained Earnings 6/30/22 7,500,000 2,735,000It was determined that the book value of the assets and liabilities of the…
On December 31, 2020, Luffy Company's investment in subsidiary account showed a balance of P400,000. This account is related to an acquisition entered at the beginning of 2020 of which Luffy acquired 80% controlling interest of an acquiree for a total consideration of P400,000, including acquisition related costs amounting to P50,000. Total comprehensive income of the acquiree at year-end amounted P1,000,000, and dividend received from the acquiree amounted to P700,000. The fair value of the investment at year-end is P600,000 and the estimated cost to sell amounted to P150,000. What should be the balance of the investment as at December 31, 2020 under cost model? a.400.000 b 500,000 с 450.000 d. 600,000
The following transactions occurred for the year ended December 31, 2020 regarding Entity C and its two subsidiaries, Entity P and Entity A: On January 1, 2020 Entity C acquired 90% of the outstanding common stocks of Entity P at a gain on bargain purchase of P100,000. On April 1, 2020, Entity C acquired 80% of the outstanding common stocks of Entity A at goodwill of P50,000. On July 1, 2020 A borrowed P1,000,000 from Entity P with annual interest of 10% per annum. On August 1, 2020, Entity C leased a building to Entity B at annual rental of P360,000. On September 1, 2020, Entity A rendered advertising services to Entity C in the amount of P200,000. On October 1, 2020, Entity C rendered management services to Entity A in the amount of P400,000. It is the policy of Entity C to account its Investment in Subsidiary using cost method in its separate financial statements. The following relevant data are provided from the separate financial statements of Entity C, Entity P, Entity A for the…
On January 2, 2020, P Company acquired 80% investment in S Company. The acquisition cost was equal to P equity in S net assets on that date. The retained earnings of P and S are P500,000 and P100,000, respectively. During 2020, P had net income of P200,000, which included its equity in S earnings, and declared dividends of P50,000; S had net income of P40,000 and declared dividends of P20,000. On December 31, 2020, the consolidated retained earnings must be: A. P666,000 B. P650,000 C. P766,000 D. P770,000
Taylor Company acquired the assets and assumed the liabilities of Swift Inc. on June 30, 2022. The consideration transferred by the acquirer were as follows: Cash amounting to P2,000,000. Issued 10,000 ordinary shares at P10 par with a market price of Issued 5 year interest bearing bonds payable with a face value of P3,000,000 with a nominal rate of 10% and effective interest of 12%. (use two decimal places for the present value factor) Acquisition related costs incurred were as follows: Legal fees amounting to P120,000, 70% of which is not yet Share issue costs paid amounted to P15,000. Bond Issue costs paid amounting to P120,000. The Balance Sheet of the two entities before acquisition were as follows: Taylor Company Swift Inc. Total Assets 16,500,000 5,235,000 Total Liabilities 2,500,000 500,000 Ordinary Shares 5,000,000 1,250,000 Share premium 1,500,000 750,000 Retained Earnings 6/30/22 7,500,000 2,735,000 It was…
Chur Company acquired a 40% interest in Flip company for 1,700,000 on January 1, 2020. The shareholders equity of FLip company on Janaury 1 and December 31, 2020 us presented below: January 1 December 31 Share capital 3,000,000 3,000,000 Revaluation surplus - 1,300,000 Retained earnings 1,000,000 1,500,000 On January 1, 2020 all the identifiable assets and liabilities of Flip company were recorded at fair value. Flip company reported profit before income tax of 1,000,000 and paid dividends of 150,000 to shareholders during the current year. The revaluation surplus is the result of the revaluation of land recognized by Flip company on December 31, 2020. Flip presents OCI net of applicable income tax. Additionally, depreciation is provided by Flip Company on the diminishing balance method whereas Chur company uses straight line. Had Flip company used…
PLEASE PROVIDE SOLUTIONOn January 1, 2022, Lucas Company acquired 85% of outstanding shares of Luna Corp. The consideration transferred includes cash payment of P2,000,000 and issuance of 50,000 shares with a market price of P45 per share. The book value of Luna Corp.’s identifiable net assets approximate its fair value, except for the following: Merchandise inventory’s fair value is lower than the book balance by 150,000. Equipment-A, with 2 years remaining useful life, costing P300,000 is understated by P50,000. Land with a fair value of P500,000 is recognized in the books amounting to P350,000. The following events happened to Luna Corp. Equipment-A was sold in June 30, 2023 for P320,000. 60% of merchandise inventory were sold in 2022. There is no movement as to the ordinary shares of Luna Corp during the year. The unadjusted trial balance as of December 31, 2022 were as follows: Lucas Company Luna Corp Cash 2,240,000 1,800,000 Trade…
On January 1, 2022, Lucas Company acquired 85% of outstanding shares of Luna Corp. Theconsideration transferred includes cash payment of P2,000,000 and issuance of 50,000 shareswith a market price of P45 per share.The book value of Luna Corp.’s identifiable net assets approximate its fair value, except for thefollowing:• Merchandise inventory’s fair value is lower than the book balance by 150,000.• Equipment-A, with 2 years remaining useful life, costing P300,000 is understated byP50,000.• Land with a fair value of P500,000 is recognized in the books amounting to P350,000.The following events happened to Luna Corp.• Equipment-A was sold in June 30, 2023 for P320,000.• 60% of merchandise inventory were sold in 2022.• There is no movement as to the ordinary shares of Luna Corp during the year.The unadjusted trial balance as of December 31, 2022 were as follows:Lucas Company Luna CorpCash 2,240,000 1,800,000Trade Receivables 1,000,000 960,000Merchandise Inventory 2,320,000…