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Required: A. Prepare journal entries to record the above data. B. Compute for the carrying amount of the investment on December 31, 2022.

Required: A. Prepare journal entries to record the above data. B. Compute for the carrying amount of the investment on December 31, 2022.

Cornerstones of Financial Accounting
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
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5. On January 1, 2021, BANNER Inc. acquired 10% of the outstanding ordinary shares of ABOMINATION Inc. for Php 900,000. These shares are designated as investments in FVOCI. ABOMINATION reported profits for the year 2021 amounting to Php 6,000,000 and paid dividends of Php 2,000,000. On January 2, 2022, BANNER gained the ability to exercise significant influence on ABOMINATION by acquiring an additional 20% of ABOMINATION's outstanding shares for Php 2,600,000. The two purchases were made at prices proportionate to the value assigned to ABOMINATION's net assets, which equaled their carrying amounts. ABOMINATION reported profits for the year 2022 amounting to Php 6,500,000 and paid dividends of Php 3,000,000. The fair values of the investments on December 31, 2021 and 2022 were Php 1,380,000 and Php 5,100,000, respectively. Required: A. Prepare journal entries to record the above data. B. Compute for the carrying amount of the investment on December 31, 2022.
Transcribed Image Text:5. On January 1, 2021, BANNER Inc. acquired 10% of the outstanding ordinary shares of ABOMINATION Inc. for Php 900,000. These shares are designated as investments in FVOCI. ABOMINATION reported profits for the year 2021 amounting to Php 6,000,000 and paid dividends of Php 2,000,000. On January 2, 2022, BANNER gained the ability to exercise significant influence on ABOMINATION by acquiring an additional 20% of ABOMINATION's outstanding shares for Php 2,600,000. The two purchases were made at prices proportionate to the value assigned to ABOMINATION's net assets, which equaled their carrying amounts. ABOMINATION reported profits for the year 2022 amounting to Php 6,500,000 and paid dividends of Php 3,000,000. The fair values of the investments on December 31, 2021 and 2022 were Php 1,380,000 and Php 5,100,000, respectively. Required: A. Prepare journal entries to record the above data. B. Compute for the carrying amount of the investment on December 31, 2022.
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