On January 1 of the current year, Yellow Company purchased 40% of the outstanding ordinary shares of Orange company paying P2,560,000 when the carrying amount of the net assets of Orange equaled P5,000,000. The difference was attributed to equipment which had a carrying amount of P2,200,000 and a fair value of P3,600,000. The remaining useful life of the equipment was 4 years. During the current year, Orange company, reported net income of P1,600,000 and paid cash dividends of P1,000,000. What amount should be reported as investment income for the current year?
On January 1 of the current year, Yellow Company purchased 40% of the outstanding ordinary shares of Orange company paying P2,560,000 when the carrying amount of the net assets of Orange equaled P5,000,000. The difference was attributed to equipment which had a carrying amount of P2,200,000 and a fair value of P3,600,000. The remaining useful life of the equipment was 4 years. During the current year, Orange company, reported net income of P1,600,000 and paid cash dividends of P1,000,000. What amount should be reported as investment income for the current year?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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640,000
400,000
500,000
560,000
![On January 1 of the current year, Yellow Company purchased 40% of the outstanding ordinary shares of
Orange company paying P2,560,000 when the carrying amount of the net assets of Orange equaled
P5,000,000. The difference was attributed to equipment which had a carrying amount of P2,200,000 and
a fair value of P3,600,000. The remaining useful life of the equipment was 4 years. During the current
year, Orange company, reported net income of P1,600,000 and paid cash dividends of P1,000,000. What
amount should be reported as investment income for the current year?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F99f09aee-4b75-4827-966f-22210841ea93%2F75fc3d05-8b8a-4040-9054-85bca6de5501%2Fnbtcnop_processed.png&w=3840&q=75)
Transcribed Image Text:On January 1 of the current year, Yellow Company purchased 40% of the outstanding ordinary shares of
Orange company paying P2,560,000 when the carrying amount of the net assets of Orange equaled
P5,000,000. The difference was attributed to equipment which had a carrying amount of P2,200,000 and
a fair value of P3,600,000. The remaining useful life of the equipment was 4 years. During the current
year, Orange company, reported net income of P1,600,000 and paid cash dividends of P1,000,000. What
amount should be reported as investment income for the current year?
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