On July 1, 2020, GREEN Company acquired 20% of the outstanding ordinary shares of another entity for ₱5,000,000. The carrying amount of the acquired shares was ₱4,000,000. The excess of cost over the carrying amount was attributable to an identifiable intangible asset which was undervalued on the investee’s statement of financial position and which had a remaining useful life of 5 years. The investee reported net income of ₱6,000,000 for 2020 and paid cash dividends of ₱1,000,000 on ordinary shares and issued 10% stock dividend on December 31, 2020. What amount of investment income should be reported by GREEN for 2020? A. ₱ 1,000,000 B. ₱ 500,000 C. ₱ 300,000 D. ₱ 800,000
On July 1, 2020, GREEN Company acquired 20% of the outstanding ordinary shares of another entity for ₱5,000,000. The carrying amount of the acquired shares was ₱4,000,000. The excess of cost over the carrying amount was attributable to an identifiable intangible asset which was undervalued on the investee’s statement of financial position and which had a remaining useful life of 5 years. The investee reported net income of ₱6,000,000 for 2020 and paid cash dividends of ₱1,000,000 on ordinary shares and issued 10% stock dividend on December 31, 2020. What amount of investment income should be reported by GREEN for 2020? A. ₱ 1,000,000 B. ₱ 500,000 C. ₱ 300,000 D. ₱ 800,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On July 1, 2020, GREEN Company acquired 20% of the outstanding ordinary shares of another entity for ₱5,000,000. The carrying amount of the acquired shares was ₱4,000,000. The excess of cost over the carrying amount was attributable to an identifiable intangible asset which was undervalued on the investee’s statement of financial position and which had a remaining useful life of 5 years. The investee reported net income of ₱6,000,000 for 2020 and paid cash dividends of ₱1,000,000 on ordinary shares and issued 10% stock dividend on December 31, 2020. What amount of investment income should be reported by GREEN for 2020?
A. ₱ 1,000,000
B. ₱ 500,000
C. ₱ 300,000
D. ₱ 800,000
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