Padre Corporation (PC) submits the following data. At the beginning of 2021, he held talks with the owners of Hijastro Corp. (HC). They reached a commercial agreement. On March 31, 2021, PC purchases for cash 30% of the issued and outstanding common shares of HC. As of December 31, 2021, HC's Net Assets (AN) were $5 million. The book value of the net assets is equal to the market value of them at the time of the event. In addition, HC for 2021 paid dividends in the amount of $100,000 as of March 31, June 20, September 30 and December 31 to common stockholders.

 

Part of the Statement of Income and Expenses of HC is presented:

Income from Continuing Operations -                                                                 $600,000

Gains From Continuing Operations - Gains From Continuing Operations                        200,000

Net Income - Net Income                                                                               $800,000

 

Required: Show computations clearly identified

1. Write down the original entry for PC of the investment

2. Determine the amount of Plusvalía - Goodwill resulting from the initial transaction, if any, for 2021.

3. Determine the change in the investment account of PC for the financial results experienced in HC for 2021.

4. Determine PC share in HC ANs for 2021.

5. How much is the amount of earnings from discontinued operations PC must reflect in its Statement of Income and Expenses.

 

MMP paid $1,320,000, for 80% interest in TRUE Company, as of July 1, 2021. At that time, TRUE's equity was $660,000. Additionally,reported earnings of $60,000 for December 2021 and declared dividends of $96,000, as of November 1, 2021.

 

Required: Submit the calculations that occurred with the investment and the entry(s) to record the above, in the MMP books.

1. Pam used the equity method to account for what happened to her subsidiary.

2. Any difference between the investment cost and the book value acquired is to be assigned to equipment and to be depreciated using the Straight Line Method in the Asuma MPP used the Cost Method to account for what happened with its subsidiary.Assume next 10 years.