Chapter 17
Chapter 17
Chapter 17
2020:
Investment in associate 5,000,000
Cash 5,000,000
Cash 900,000
Investment in associate 900,000
2021:
Investment in associate 1,800,000
Investment income 1,800,000
Cash 1,500,000
Investment in associate 1,500,000
Cash 450000
Investment in associate 450000
CHAPTER 17
PROBLEM 17 - 9:
ANSWER: C, 300,000
SOLUTION:
Share in net income from April 1 to December (1,000,000
33 x 9/12 x 0.40) 300,000
PROBLEM 17 - 10:
ANSWER: B, 7,140,000
SOLUTION:
Cost: 7,000,000
Add: Share in net income (0.20 x 1,800,000) 360,000
Total 7,360,000
Less: Amortization (1,000,000/10) 100,000
Share in cash dividend (0.20 x 600,000) 120,000
Carrying amount 7,140,000
PROBLEM 17 - 11:
ANSWER: C, 750,000
SOLUTION:
Share in net income from Jul. 1, 2020 to Dec. 31,
(5,000,000
2020 x 6/12 x 0.30) 750,000
Interest acquired (30,000/100,000) 30%
PROBLEM 17 - 12:
ANSWER: A, 4,350,000
SOLUTION:
Acquisition, January 1 4,000,000
Add: Share in net income (0.10 x 5,000,000) 500,000
Total 4,500,000
Less: Share in cash dividend (0.10 x 1,500,000) (150,000)
Carrying Amount 4,350,000
PROBLEM 17 - 13:
ANSWER: D, 1,720,000
SOLUTION:
Acquisition cost (SQUEEZE) 1,720,000
Add: Share in net income (0.25 x 1,200,000) 300,000
Total 2,020,000
Less: Share in cash dividend (0.25 x 480,000) (120,000)
Carrying Amount 1,900,000
PROBLEM 17 - 14:
ANSWER: B, 2,700,000
SOLUTION:
Acquisition cost 2,560,000
Carrying amount of net assets (0.40 x 5,000,000) 2,000,000
Excess of cost over carrying amount 560,000
PROBLEM 17 - 15:
ANSWER: A, 2,400,000
SOLUTION:
Net income 5,000,000
Preference dividend (0.10 x 2,000,000) (200,000)
Net income to ordinary shares 4,800,000
PROBLEM 17 - 16:
ANSWER:
SOLUTION:
PROBLEM 17 - 17:
ANSWER 1: A, 560,000
SOLUTION:
Acquisition Cost 2,560,000
Net assets acquired (40% x 5,000,000) 2,000,000
Excess of cost over carrying amount 560,000
ANSWER 3: B, 2,700,000
SOLUTION:
Acquisition cost 2,560,000
Investment income 540,000
Share in cash dividend (40% x 1,000,000) (400,000)
Carrying Amount - 12/31/16 2,700,000
PROBLEM 17 - 18:
ANSWER 1: B, 480,000
SOLUTION:
Share in net income for 2021 (40% x 3,000,000) 1,200,000
Amortization of excess - Inventory (400,000)
Amortization of excess - Plant and equipment (3,200,000/10
(320,000)
yrs)
Net Income for 2021 480,000
ANSWER 2: A, 1,080,000
SOLUTION:
Share in net income for 2022 (40% x 5,000,000) 2,000,000
Amortization of excess - Plant and equipment (320,000)
Amortization of excess - Land (600,000)
Net Income for 2022 1,080,000
ANSWER 3: C, 15,360,000
SOLUTION:
Acquisition cost 15,000,000
Investment Income 2021 480,000
Cash dividends for 2021 (40% x 1,000,000) (400,000)
Investment Income 2022 1,080,000
Cash dividends for 2022 (40% x 2,000,000) (800,000)
Carrying Amount - Dec. 31, 2022 15,360,000
MULTIPLE CHOICE THEORY
1. A
2. C
3. B
4. D
5. D
6. B
7. D
8. B