On January 1 2014 Jenica Company acquired 10 of the outstanding ordinary shares

On january 1 2014 jenica company acquired 10 of the

This preview shows page 8 - 10 out of 11 pages.

39.On January 1, 2014, Jenica Company acquired 10% of the outstanding ordinary shares of an investee for P4,000,000. On January 1, 2015, the entity acquired an additional 20% of the investee’s outstanding ordinary shares for P10,000,000. The fair value the investee’s net assets equaled carrying amount on January 1, 2015. The fair value of the 10% interest on January 1, 2015 was P6,000,000. The investee reported the following:20142015Dividend paid2,000,0003,000,000Net income6,000,0007,000,000What is the carrying amount of the investment in associate on December 31, 2015?a.16,000,000b.17,200,000c.15,200,000d.17,600,000
Background image
40.During the current year, Kim Company had the following transactions pertaining to a new office building:Purchase price of land and an old unusable building3,000,000Legal fees for contract to purchase land100,000Architect fee400,000Demolition of old building to make room for new building construction250,000Sale of scrap from old building 50,000Construction cost of new building fully completed15,000,000What amount should be reported as initial cost of the new building?41.Alyssa Company owned a machine that was bought on January 1, 2011 for P8,000,000. The machine was estimated to have a useful life of five years and residual value of P500,000. The entity used the sum of years’ digits method of depreciation. On January 1, 2014, the entity determined that the total useful life of the machine should have been four years and the residual value is P600,000. What amount should be recorded as depreciation expense on the machine for 2014?42.On January 1, 2009, Nicole Company purchased a new building at a cost of P6,000,000. Depreciation was computed on the straight line basis at 4% per year. On January 1, 2014, the building was revalued at a fair valueof P8,000,000. What is the revaluation surplus on December 31, 2014?43.Ben Company provided the following calculation of an impairment loss on December 31, 2014:GoodwillNet assetsCarrying amount3,000,0009,000,000Impairment loss(3,000,000)(2,000,000)Adjusted carrying amount-7,000,000There has been a favorable change in the estimate of the recoverable amount of the net assets. The recoverable amount is now P8,000,000 on December 31, 2015. The carrying amount of the net assets would have been P7,200,000 on December 31,2015 if there was no impairment loss recognized on December 31, 2014. Assets aredepreciated at 20% of reducing balance. What gain on reversal of impairment should be recognized in 2015?a.1,000,000b.2,400,000c.1,600,000d.0
Background image
Image of page 10

You've reached the end of your free preview.

Want to read all 11 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture