In: Accounting
On January 1, 20x1, Entity acquires 30% of Co. B, for P600,000.
Co. B reports profit of P200,000 and also declares
dividends of P50,000 in 20x1. How much is the carrying amount of
the investment in associate, Dec 31, 20x1?
a) P600,000 c) P645,000
b) P660,000 d) P630,000
58 A Company acquired a 30% interest in B Company, for
P400,000 on January 1, 2020. During the year, B Company
earned profits of P80,000 and paid no dividends. IN the year 2021,
B Company incurred losses of P32,000 and
paid dividends of P10,000. In A Company's consolidated financial
statements, at the end of 2021, what would
be the carrying amount of its interest in B Company, according to
IAS 28, Investments in Associates ?
a) P438,000
c) P414,400
b) P411,400
d) P400,000
Conceptual Framework/ Accounting Overview/ Standards/Financial
Statements…
59 Which of the following is one of the fundamental
qualitative characteristics?
a) Faithful
representation c) Reliability
b)
Comparability d) Relevant
60 A concept that states that all the components of a
complete set financial statement are interrelated.
a) Concept of
Entity c) Accounting Process Concept
b) Concept of
Articulation d) Concept of Fair Presentation
PAS 29 - Financial Reporting in Hyperinflationary economies
61 Under constant peso accounting…
a) all items in the
statement of profit or loss and other comprehensive income are
restated.
b) some items in the
statement of profit or loss and other comprehensive income are
restated.
c) items in the
statement of profit or loss and other comprehensive income are not
restated.
d) items in the
statement of profit or loss are restated but not in other
comprehensive income
The gain or loss on net monetary position is computed as,
a) the difference between the "net monetary items, end
- historical" and "net monetary items, end - restated'.
This amount is recognized in profit or loss.
b) the difference between the "net monetary items, end
- historical" and "net monetary items, end - restated'.
This amount is recognized in equity.
c) the difference between the "net monetary items, beg.
- historical" and "net monetary items, end - restated'.
This amount is recognized in profit or loss.
d) the difference between the "net monetary items, beg.
- historical" and "net monetary items, end - restated'.
This amount is recognized in equity.
1) Carrying value of Investment in associates-Correct Option is C-645000
In its consolidated financial statements, an investor should use the equity method of accounting for investments in associates.
Equity method means a method of accounting by which an equity investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the net assets of the associate
Carrying Amount= Cost of Acquisition+Share of Profit in Associate- Dividend Paid
= P600,000+30% of P200000-30% of P50000= P645000
2)Similarily,Correct Option is B-411400
Carrying Amount= Cost of Acquisition+Share of Profit in Associatefor Year 2020-Share of Loss in Associate for Year 2021- Dividend Paid
=400000+30% of 80000-30%of 32000-30% of 10000
=P411400
59) Option A - Faithful Representation
60) Option B- Concept of Articulation
61) Option A-all items in the statement of profit or loss and other comprehensive income are restated.
IAS 29 requires the statement of comprehensive income (income statement items together with other comprehensive income) are restated for inflation observed during the period.
Net Monetory Gain
Correct Option is c) the difference between the "net monetary
items, beg. - historical" and "net monetary items, end -
restated'.
This amount is recognized in profit or loss.