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1. On January 2, 2021, Marco Company purchased 20,000 shares (20%) of Polo Company's ordinary shares for

P220 per share. Marco also paid transaction cost of P100,000. The fair value of the net assets acquired is

P4,200,000. During 2021, Polo reported the following in its Statement of Comprehensive Income a

P4,000,000 net income and a P500,000 revaluation surplus at the end of the year. Polo Company paid cash

dividends of P3,000,000 on December 31, 2021. What is the carrying value of the Investment on December

31, 2021?

2. On April 1, 2021, Fire Corporation acquired 40,000 shares of the 160,000 shares outstanding of Pyro Inc. at

P15 per share. The book value of Pyro Inc.'s net assets on this date amounted to P2,000,000. Pyro's

identifiable assets equal their fair values except for Land which had a fair value in excess of carrying amount

of P50,000, Equipment having a remaining life of 8 years had a fair value of P160,000 higher than book value

and Inventories whose fair value was P20,000 greater than cost. All the inventories had all been sold during

the current year.

Pyro Inc. reported total Net income in 2021 of P800,000 and Unrealized Gain-FVOCI of P100,000. Fire

Corporation received a total cash dividend at year end of P80,000.

Q1: How much from the acquisition cost on January 2021 is attributed to goodwill?

Q2: How much is the total income that should be reported in Fire Corporation's Profit or Loss Statement for

the year 2021?

a. P115,000 b. P141,250 c. P166,250 d. P165,000

Q3: How much is the carrying value of the Investment on December 31, 2021?

3. Table owns 50% and 20% of Chair Corporation's ordinary and preference shares, respectively. Chair's shares

outstanding at December 31, 2019 follow:

Ordinary share P4,000,000

10% cumulative preference share 900,000

Chair reported net income of P600,000 for the year ended December 31, 2019 and declared the current year

dividend on the preference shares.

What total amount of revenue should Table Company disclose in the statement of comprehensive income

related to its investment in Chair Company for the year ended December 31, 2019?

4. On January 1, 2020, Orange Corp. acquired 200,000 shares representing 40% interest of Kahel's ordinary

shares for P4,500,000. Kahel reported during 2021 a total net income of P4,000,000 and foreign translation

loss of P500,000. Kahel also distributed total cash dividends at year end of P3,000,000. On January 1, 2021,

Kahel issued 300,000 shares at P 23 per share which Orange Corp. did not purchase any of these shares.

Q1: How much is the total net dilution gain/loss that should be recognized by Orange Corp.?

a. P112,500 gain b. P187,500 gain c. P187,500 loss d. P112,500 loss

Q2: What is the carrying value of Investment in Kahel after the recognition of dilution gain/loss?

5. On January 1, 2020, Green Corp. acquired 30,000 shares representing 10% interest of Berde's ordinary

shares for P4,000,000. Green does not have any significant influence nor control over the financial and

operating policy of Berde. Berde reported during 2020 a total net income of P4,000,000 and distributed

dividends of P400,000. On January 1, 2021, Green purchased additional 20% interest of Berde's ordinary

shares for P7,500,000. The fair value of the 10% interest is P3,750,000. The net assets of Berde are fairly

valued. During 2021, Berde reported net income of P5,000,000 and distributed a total dividend of P300,000.

What is the carrying value of the Investment on December 31, 2021?

Bloom Corporation acquired 30% of Gloom Company's 100,000 voting stock on January 2, 2018 for

P2,000,000 when the net assets of Gloom Company was P6,000,000. Gloom earned P1,000,000 and

P1,500,000 in 2018 and 2019, respectively. Gloom Company paid dividends of P300,000 in 2018 and

P500,000 in 2019. Market value of Gloom's ordinary shares is P80 on December 31, 2018 and P90 on

December 31, 2019. On January 2, 2019, Bloom Company sold 12,000 shares of its investment at the

prevailing market value of P80 of Gloom's shares.

Question 1: How much is the gain or loss on sale taken to Profit or Loss on January 2, 2019?

Question 2: If after the sale Bloom Company reclassified its remaining investment to Investment at Fair

Value through Profit or Loss, how much is the total net amount of income that should be reported in

Profit or Loss for the year 2019?

Question 3: If after the sale Bloom Company reclassified its remaining investment to Investment at Fair

Value through Other Comprehensive Income, how much is the total net amount of income that should

be reported in Profit or Loss for the year 2019?