Investment in Associate IIA

Alyssa Kathlene Ann Beleñ a

PROBLEM 1
Requirement 1:
Acquisition costs P3,000,000
Less: CV of the net assets acquired
[(P8,000,000-P2,000,000)x30%] P1,800,000
Excess of AC Cover the CV of the net assets acquired P1,200,000
Requirement 2:
Acquisition costs P3,000,000
Less: FV of the net assets acquired
[(P12,000,000-P3,000,000)x30%] P2,700,000
Goodwill (AC is higher that the FV of
net assets acquired) P300,000
Investment in Associates-KPOP Company P3,000,000
Cash P3,000,000
To record the purchase of 30% interest of KPOP Company.
Requirement 3:
Acquisition costs P3,000,000
Add: Share in net Income (5,000,000x30%) P1,500,000
Less: Share in dividends declared by associate
(1,500,000x30%) P450,000
Balance of the investment in associate as of 2020 P4,050,000
Investment in Associates-KPOP Company P1,500,000
Investment Income P1,500,000
To record the share in net income of KPOP Company
Cash P450,000
Investment in Associates-KPOP Company P450,000
To record the share in the dividends declared by KPOP Company.
Requirement 4:
Beg. Balance P4,050,000
Less: Share in net loss (P2,000,000x30%) P600,000
Less: Share in dividends declared by associate
(P1,000,000x30%) P300,000
Balance of the investment in associate as of
2021 P3,150,000
Investment loss/Loss on investment P600,000
Investment in Associates-KPOP Company P600,000
To record the share in net loss of KPOP Company.
Cash P300,000
Investment in Associate-KPOP Company P300,000
To record the share in the dividends declared by KPOP Company.
Requirement 5:
Acquisition costs P3,000,000
Add: Share in net Income
(P3,000,000x30%) P900,000
Less: Share in dividends declared by associate
(P1,700,000x30%) P510,000
Balance of the investment in associate of
2022 P3,390,000
Investment in Associates-KPOP Company P900,000
Investment Income P900,000
To record the share in net income of KPOP Company.
Cash P510,000
Investment in Associates-KPOP Company P510,000
To record the share in the dividends declared by KPOP Company.

PROBLEM 2
Requirement 1:
Acquisition cost P4,700,000
Add: Share in net income P3,087,500
Less: Share in dividends declared by associate
(P4,000,000x47.50%) P(1,900,000)
Balance of the investment in associate as of 2019 P5,887,500
Selling price of the 30,000 shares P4,360,000
Carrying amount of 30,000 as of January 11, 2020
[P5,887,500 x (P30,000 shares/P47,500 shares)] P3,718,421.053
Gain on sale of 30,000 shares on January 1, 2020 P641,578.95
Requirement 2:
Fair value of 17,500 shares as of January 1, 2020
(P17,500 x P105.00) P1,837,500
Carrying amount of 17, 500 shares as of January 1, 2020
[P5,887,500 x (P17,500 shares/47,500 shares)] P2,169,078.95
Loss on sale of 30, 000 shares on January 1, 2020 P(331,578.95)

Requirement 3:
Net income of the associate P6,500,000
Ownership interest x 47.50%
Income from associate (share in net income) December 31, 2020 P3,087,500
Requirement 4:
Remaining shares 17,500
Fair value at December 31, 2020 x P120.00
Carrying value of the remaining 17, 500 shares as of 2020 P2,100,000
Requirement 5:
Fair value of 17,500 shares as of January 1, 2020
(P17,500 x P105.00) P1,837,500
Fair value of 17,500 shares as of December 31, 2020
(P17,500 x P120.00) P2,100,000
Unrealized loss –P/L (fair value method) P(262,500)
Requirement 6:
Net income of the associate P7,200,000
Ownership interest x 47.50%
Income from associate (share in net income)
December 31, 2021 P3,420,000
Requirement 7:
Remaining shares 17,500
Fair value at December 31, 2021 x P150.00
Carrying value of the remaining 17,500 shares as of 2021 P2,625,000
Requirement 8:
Fair value of 17,500 shares of December 31, 2020
(P17,500xP120.00) P2,100,000
Fair value of 17,500 shares of December 31, 2021
(P17,500xP150.00) P2,625,000
Unrealized loss-P/L (fair value method) P(525,000)

PROBLEM 3
Date/Particulars Carrying value Unrecognized loss amount
January 1, 2019 P4, 550,000
Less: Share in net loss
(P2,550,000 x 28%) P714,000
Balance of the investment
as of the end of 2019 P3,836,000
Less: Share in net loss
(8,000,000 x 28%) P2,240,000
Balance of the investment
as of the end of 2020 P1,596,000
Less: Share in net loss
(P11,000,000 x 28%)=P3,080,000: P1,596,000 P1,484,000
Balance of the investment
as of the end of 2021 P 0 P1,484,000
Add: Share in net income
(P3,880,000 x 28%)=P1,086,400: P 0 P1,086,400
Balance of the investment
as of the end of 2022 P 0 P397,600
Add: Share in net income
(P8,099,000 x 28%)=P2,267,720: P1,870,120 P397,600
Balance of the investment
as of the end of 2023 P1,870,120 P 0
Requirement 1:
Balance of the investment as of December 31, 2020 P1,596,000
Requirement 2:
Recognized amount of loss for December 31, 2021 P1,596,000
Requirement 3:
Balance of the investment as of December 31, 2021 P 0
Requirement 4:
Unrecognized amount of loss December 31, 2021 P1,484,000
Requirement 5:
Balance of the investment as of December 31, 2022 P 0
Requirement 6:
Unrecognized amount of loss December 31, 2022 P397,600
Requirement 7:
Recognized amount of profit December 31, 2023 P1,870,120
Requirement 8:
Balance of the investment as of December 31, 2023 P1,870,120