In July 1, 20X1, CBC acquired 25% of the outstanding ordinary shares of Yellow Corp at a total cost of P7,000,000. Net assets of Yellow was only P6,000,000. Yellow's depreciable assets (10-year remaining life) has a fair value of P600,000 more than the book value. Yellow earned net profit of P5,400,000 evenly throughout the year. Yellow paid cash dividends of P1,050,000 at Dec 31, 20X1. The carrying amount of the investment account at Dec 31, 20X1 would be: 7,000,000 7,397,500 7,412,500 8,087,500
In July 1, 20X1, CBC acquired 25% of the outstanding ordinary shares of Yellow Corp at a total cost of P7,000,000. Net assets of Yellow was only P6,000,000. Yellow's depreciable assets (10-year remaining life) has a fair value of P600,000 more than the book value. Yellow earned net profit of P5,400,000 evenly throughout the year. Yellow paid cash dividends of P1,050,000 at Dec 31, 20X1. The carrying amount of the investment account at Dec 31, 20X1 would be: 7,000,000 7,397,500 7,412,500 8,087,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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In July 1, 20X1, CBC acquired 25% of the outstanding ordinary shares of Yellow Corp at a total cost of P7,000,000. Net assets of Yellow was only P6,000,000. Yellow's depreciable assets (10-year remaining life) has a fair value of P600,000 more than the book value. Yellow earned net profit of P5,400,000 evenly throughout the year. Yellow paid cash dividends of P1,050,000 at Dec 31, 20X1.
The carrying amount of the investment account at Dec 31, 20X1 would be:
7,000,000
7,397,500
7,412,500
8,087,500
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