Question
ABC, Inc. acquired 50,000 ordinary shares of AAA for P5 per share and 125,000 ordinary shares of BBB Corp for P10 per share on January
ABC, Inc. acquired 50,000 ordinary shares of AAA for P5 per share and 125,000 ordinary shares of BBB Corp for P10 per share on January 2, 2016. Both AAA Inc and BBB Corp have 500,000 ordinary shares outstanding. Both securities are being held as long-term investments. Changes in retained earnings for AAA and BBB for 2016 and 2017 are as follows:
AAA, Inc. BBB, Corp
Retained earnings,1/1/2016 1,000,000 (175,000)
Cash dividends, 2016 (125,000) -
Profit, 2016 200,000 325,000
Retained earnings,12/31/2016 1,075,000 150,000
Cash dividends, 2017 (150,000) (50,000)
Profit, 2017 300,000 125,000
Retained earnings,12/31/2017 1 ,125,000 225,000
Market value of share:
12/31/2016 12/31/2017
7.00 6.50
12.00 15.00
The carrying amount of investment in AAA, Inc. as at December 31, 2017 is
- P350,000
- P252,000
- P250,000
- Answer not given
- P325,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started