On January 1, year 2, ABC Company exchanged 150,000 shares of its P20 par value common stock for all of XYZ's net assets. Both corporations continued to operate as separate businesses, maintaining accounting records with years ending December 31. ABC uses the equity method to account for its investment in XYZ. Information from separate company operations follows: Retained earnings-12/31/Y1 (ABC) P3,200,00 and (XYZ) P925,000; Net income - six months ended 6/30/Y2 (ABC) P800,000 and (XYZ) P275,000; Dividends paid-3/25/Y2 by ABC was P750,000. What amount of retained earnings would ABC reports in its June 30, year 2 consolidated balance sheet?
On January 1, year 2, ABC Company exchanged 150,000 shares of its P20 par value common stock for all of XYZ's net assets. Both corporations continued to operate as separate businesses, maintaining accounting records with years ending December 31. ABC uses the equity method to account for its investment in XYZ. Information from separate company operations follows: Retained earnings-12/31/Y1 (ABC) P3,200,00 and (XYZ) P925,000; Net income - six months ended 6/30/Y2 (ABC) P800,000 and (XYZ) P275,000; Dividends paid-3/25/Y2 by ABC was P750,000. What amount of retained earnings would ABC reports in its June 30, year 2 consolidated balance sheet?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 14RE
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On January 1, year 2, ABC Company exchanged 150,000 shares of its P20 par value common stock for all of XYZ's net assets. Both corporations continued to operate as separate businesses, maintaining accounting records with years ending December 31. ABC uses the equity method to account for its investment in XYZ. Information from separate company operations follows:
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