Shaun Company reports a net income of P280,000 each year and pays an annual cash dividend of P100,000. The company holds net assets of P2,400,000 on January 1, 20x1. Ón that date, Jared Company purchases 40% of the outstanding stock for P1,200,000, which gives it the ability to have joint control with Glassman Company over Shaun. At the purchase date, the excess of Jared's cost over its proportionate share of Shaun's book value was assigned to goodwill. REQUIRED: 5. How much is the net investment income each year? 6. On December 31, 20x2, what is the investment in Shaun Company balance (equity method) in Jared's financial records?
Shaun Company reports a net income of P280,000 each year and pays an annual cash dividend of P100,000. The company holds net assets of P2,400,000 on January 1, 20x1. Ón that date, Jared Company purchases 40% of the outstanding stock for P1,200,000, which gives it the ability to have joint control with Glassman Company over Shaun. At the purchase date, the excess of Jared's cost over its proportionate share of Shaun's book value was assigned to goodwill. REQUIRED: 5. How much is the net investment income each year? 6. On December 31, 20x2, what is the investment in Shaun Company balance (equity method) in Jared's financial records?
Chapter9: Acquisitions Of Property
Section: Chapter Questions
Problem 44P
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Transcribed Image Text:Shaun Company reports a net income of P280,000 each year and pays an annual cash dividend of P100,000.
The company holds net assets of P2,400,000 on January 1, 20x1. Ôn that date, Jared Company purchases
40% of the outstanding stock for P1,200,000, which gives it the ability to have joint control with Glassman
Company over Shaun. At the purchase date, the excess of Jareď's cost over its proportionate share of
Shaun's book value was assigned to goodwill.
REQUIRED:
5. How much is the net investment income each year?
6. On December 31, 20x2, what is the investment in Shaun Company balance (equity method) in Jared's
financial records?
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