Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cash received in Lieu of Share Dividends Liquidating Dividends On January 2, 2018, Earth Company has 20,000 shares of P100 par value ordinary shares. The

image text in transcribed

Cash received in Lieu of Share Dividends

image text in transcribedimage text in transcribed
Liquidating Dividends On January 2, 2018, Earth Company has 20,000 shares of P100 par value ordinary shares. The shares were acquired a year ago at a cost of P440,000. On February 14, of the current year, Earth Company received 15% cash, liquidating dividends from the Investee Corporation. a. Assuming that the Investee Corporation is a wasting asset corporation and partial liquidation, how much is the amount of loss on liquidation to be recognized in 2018? b. Assuming that the Investee Corporation is a wasting asset corporation and partial liquidation, provide the relevant entries. C. Assuming that the Investee Corporation is other than a wasting asset corporation, how much is the amount of loss on liquidation to be recognized in 2018? d. Assuming that the Investee Corporation is other than a wasting asset corporation and partial liquidation, provide the relevant entries.Cash Received in Lieu of Share Dividends On October 1, 2018, Qualms Corp. owns 15,000 fair value through other comprehensive income shares acquired at a cost of P345,000. The shares represent 15% of the shares outstanding of Sarcasm Corporation. On the same date, Sarcasm declared 15% share dividends payable to stockholders on October 31. On October 31, the stock is selling at P40 per share. However, on October 31, Sarcasm gave P36 per share cash in lieu of the supposed share dividends previously declared. Case no. 1: Assuming the shares are investment in unquoted securities measured as cost. Case no. 2: Assuming the shares are financial assets at fair value though profit or loss. Case no. 3: Assuming the shares are investment in equity securities designated as at fair value through other comprehensive income. a. Prepare all the necessary entries. b. What is the dividend income to be recognized in 2018? c. What is the gain or loss on sale of investment to be recognized in 2018

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Corporate Finance

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan

12th edition

1259918947, 1260091908, 978-1259918940

More Books

Students also viewed these Accounting questions

Question

A cost - volume - profit chart is also known as a ( n ) :

Answered: 1 week ago

Question

Go, do not wait until I come

Answered: 1 week ago