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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

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