On Jan. 1, 2020, ABC bought 250,000 shares of XYZ Corporation for P8,000,000. All 1,000,000 P20-par shares of XYZ were issued and outstanding. The net assets were valued at P32,000,000 but they were carried in the accounting books at P30,000,000. The difference is attributable to an equipment that has a useful life of 4 years. Details relating to XYZ for the years 2020 and 2021 are as follows:What is the balance of the Investment in Associate as of Dec. 31, 2021? 20202021TotalP 3,000,000P4,000,000 P 7,000,000Net IncomeGross Profit from Upstream Sales(2020 – 30% remain unsold, 2021 – 40% remain unsoldas of their respective years but sold in the subsequent)200,000100,000P300,000Dividends DeclaredP 2,000,000P 2,500,000 P 6,500,000P 20,000,000 P 20,000,000Share Capital, Ordinary SharesShare Capital, 8% Cumulative,Nonparticipating Preference SharesTotal Share Capital-0-4,000,000P20,000,000P24,000,000

2020 2021 Total P 3,000,000 P4,000,000 P 7,000,000 Net Income Gross Profit from Upstream Sales (2020 – 30% remain unsold, 2021 - 40% remain unsold as of their respective years but sold in the subsequent) 200,000 100,000 P300,000 Dividends Declared P 2,000,000 P 2,500,000 P 6,500,000 P 20,000,000 P 20,000,000 Share Capital, Ordinary Shares Share Capital, 8% Cumulative, Nonparticipating Preference Shares Total Share Capital 4,000,000 P20,000,000 P24,000,000 -0-

2020 2021 Total P 3,000,000 P4,000,000 P 7,000,000 Net Income Gross Profit from Upstream Sales (2020 – 30% remain unsold, 2021 - 40% remain unsold as of their respective years but sold in the subsequent) 200,000 100,000 P300,000 Dividends Declared P 2,000,000 P 2,500,000 P 6,500,000 P 20,000,000 P 20,000,000 Share Capital, Ordinary Shares Share Capital, 8% Cumulative, Nonparticipating Preference Shares Total Share Capital 4,000,000 P20,000,000 P24,000,000 -0-

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter2: Financial Statements, Cash Flow,and Taxes

Section: Chapter Questions

Problem 21SP: Begin with the partial model in the file Ch02 P21 Build a Model.xlsx on the textbooks Web site. a....

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