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    ACTIVITY 2 (A02) - Investment in Associate (IIA)

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    Joebin Corporal Lopez
    1) The document contains problems and requirements related to accounting for investments in associates. It provides details on the acquisition of investments, carrying amounts over multiple periods, gains and losses, dividends, and impairment testing. 2) Requirements include calculating carrying amounts, gains/losses on sale of investments, remeasurement amounts, dividend income, and unrecognized losses from impairment of investments. 3) The problems work through multiple years of transactions and adjustments to investments in associates, applying the equity method of accounting.

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    ACTIVITY 2 (A02) - Investment in Associate (IIA)

    Uploaded by

    Joebin Corporal Lopez
    124 views3 pages
    1) The document contains problems and requirements related to accounting for investments in associates. It provides details on the acquisition of investments, carrying amounts over multiple periods, gains and losses, dividends, and impairment testing. 2) Requirements include calculating carrying amounts, gains/losses on sale of investments, remeasurement amounts, dividend income, and unrecognized losses from impairment of investments. 3) The problems work through multiple years of transactions and adjustments to investments in associates, applying the equity method of accounting.

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    ACTIVITY 2 (A02)- Investment in Associate (IIA)

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    1) The document contains problems and requirements related to accounting for investments in associates. It provides details on the acquisition of investments, carrying amounts over multiple periods, gains and losses, dividends, and impairment testing. 2) Requirements include calculating carrying amounts, gains/losses on sale of investments, remeasurement amounts, dividend income, and unrecognized losses from impairment of investments. 3) The problems work through multiple years of transactions and adjustments to investments in associates, applying the equity method of accounting.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    124 views3 pages

    ACTIVITY 2 (A02) - Investment in Associate (IIA)

    Uploaded by

    Joebin Corporal Lopez
    1) The document contains problems and requirements related to accounting for investments in associates. It provides details on the acquisition of investments, carrying amounts over multiple periods, gains and losses, dividends, and impairment testing. 2) Requirements include calculating carrying amounts, gains/losses on sale of investments, remeasurement amounts, dividend income, and unrecognized losses from impairment of investments. 3) The problems work through multiple years of transactions and adjustments to investments in associates, applying the equity method of accounting.

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    © All Rights Reserved
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    ACTIVITY 2 (A02)- Investment in Associate

    LOPEZ, JOEBIN C. INTACC1-189


    BSA-1
    PROBLEM 1
    Requirement 1
    Acquisition cost P3,000,000.00
    Less: Book value of net assets acquired:
    Total Assets at BV P 8,000,000.00
    Total Liabilities at BV (2,000,000.00)
    Net Assets at BV 6,000,000.00
    Multiply by 30% (1,800,000.00)
    Excess cost over book value P 1,200,000.00

    Requirement 2
    Acquisition cost P 3,000,000.00
    Less: Fair value of net assets acquired:
    Total assets at FV P 12,000,000.00
    Total liabilities at FV (3,000,000.00)
    Net Assets at FV 9,000,000.00
    Multiply by 30% (2,700,000.00)
    Goodwill (Gain on bargain purchase) P 300,000.00

    Requirement 3

    Initial carrying amount P 3,000,000.00


    Add: Income from associate (P5M x 30%) 1,500,000.00
    Less: Share in dividends (P1.5M x 30%) (450,000.00)
    Carrying amount of investment,
    12/31/2020 P 4,050,000.00

    Requirement 4

    Carrying amount of investment, 12/31/2020 P4,050,000.00


    Add: Share in loss from associate (P2M x 30%) (600,000.00)
    Less: Share in dividends (P1M x 30%) (300,000.00)
    Carrying amount of investment,
    12/31/2021 P 3,150,000.00

    Requirement 5

    Carrying amount of investment, 12/31/2021 P3,150,000.00


    Add: Income from associate (P3M x 30%) 900,000.00
    Less: Share in dividends (P1.7M x 30%) (510,000.00)
    Carrying amount of investment,
    12/31/2022 P 3,540,000.00
    ACTIVITY 2 (A02)- Investment in Associate
    LOPEZ, JOEBIN C. INTACC1-189
    BSA-1

    PROBLEM 2
    Requirement 1

    Sale price of investment P 4,360,000.00


    Less: Carrying amount of investment sold (P4.75M x 30/47.5) (3,000,000.00)
    Gain on sale of investment P 1,360,000.00

    Requirement 2

    Fair value of remaining shares (17,500 x P105) P1,837,500.00


    Carrying amount of remaining shares (P4.75M-3M) (1,750,000.00)
    Remeasurement gain P 87,500.00

    Requirement 3
    Dividends declared by
    TACLOBAN P 4,000,000.00
    Multiply by 17.50%
    Dividend Income P 700,000.00

    Requirement 4

    No. of shares held 17,500


    Fair value per share P120.00
    Carrying amount of investment,
    12/31/2020 P 2,100,000.00

    Requirement 5

    Fair value of shares, 12/31/2020 P2,100,000.00


    Less: Fair value of shares,
    1/1/2020 (1,837,500.00)
    Unrealized gain, 2020 P 262,500.00

    Requirement 6
    Dividends declared by
    TACLOBAN P5,100,000.00
    Multiply by 17.50%
    Dividend Income P 892,500.00

    Requirement 7

    No. of shares held 17,500


    Fair value per share P150.00
    Carrying amount of investment,
    12/31/2021 P 2,625,000.00

    Requirement 8

    Fair value of shares, 12/31/2021 P2,625,000.00


    Less: Fair value of shares, 12/31/2020 (2,100,000.00)
    ACTIVITY 2 (A02)- Investment in Associate
    LOPEZ, JOEBIN C. INTACC1-189
    BSA-1
    Unrealized gain, 2021 P 525,000.00

    PROBLEM 3

    Carrying Amount Unrecognized amount


    of Investment of Losses
    Carrying amount, 1/1/2019 P 4,550,000.00
    Share of loss- 2019 (714,000.00)
    Carrying amount, 12/31/2019 3,836,000.00
    Share of loss- 2020 (2,240,000.00)
    Carrying amount, 12/31/2020 1,596,000.00
    Share of loss- 2021 (1,596,000.00) P (1,484,000.00)
    Carrying amount, 12/31/2021 - (1,484,000.00)
    Share of profit- 2022 - 1,086,400.00
    Carrying amount, 12/31/2022 - (397,600.00)
    Share of profit- 2023 1,870,120.00 397,600.00
    Carrying amount, 12/31/2023 P 1,870,120.00 P0

    Requirement 1
    Carrying amount of investment as of December 31, 2020 P1,596,000.00

    Requirement 2
    Recognized amount of loss for December 31, 2021 P 1,596,000.00

    Requirement 3
    Carrying amount of investment as of December 31, 2021 P0

    Requirement 4
    Remaining amount of unrecognized loss as of December 31,
    2021 P 1,484,000.00

    Requirement 5
    Carrying amount of investment as of December 31, 2022 P0

    Requirement 6
    Remaining amount of unrecognized loss as of December 31,
    2022 P 397,600.00

    Requirement 7
    Recognized amount of profit for December 31, 2023 P 1,870,120.00

    Requirement 8
    Carrying amount of investment as of December 31, 2023 P 1,870,120.00

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