On January 1, 2014, an investor acquired 20% interest in an investee enabling the investor to exercise significant influence over the investee. On this date, the identifiable assets and liabilities of the investee are recorded at fair value. During the year, the investee reported net income of P2,000,000 and paid no dividend. Also, during the year, the investee sold inventory costing P200,000 for P300,000 to the investor. The inventory is unsold by the investor on December 31,2014. What amount is to be recorded as the investor’s share in net income?
On January 1, 2014, an investor acquired 20% interest in an investee enabling the investor to exercise significant influence over the investee. On this date, the identifiable assets and liabilities of the investee are recorded at fair value. During the year, the investee reported net income of P2,000,000 and paid no dividend. Also, during the year, the investee sold inventory costing P200,000 for P300,000 to the investor. The inventory is unsold by the investor on December 31,2014. What amount is to be recorded as the investor’s share in net income?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
Related questions
Question
On January 1, 2014, an investor acquired 20% interest in an
investee enabling the investor to exercise significant influence over
the investee. On this date, the identifiable assets and liabilities of the
investee are recorded at fair value.
During the year, the investee reported net income of P2,000,000
and paid no dividend.
Also, during the year, the investee sold inventory costing P200,000
for P300,000 to the investor. The inventory is unsold by the investor
on December 31,2014.
What amount is to be recorded as the investor’s share in net
income?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning