Jan 1- Nadayag Company purchased 20,000 shares of Cortez Company, P100 par at P110 per share

Mar 1- Cortez Company issued rights to Nadayag Company, each permitting the purchase of 1/4 share at par. No entry was made. The bid price of the share was P140 and there was no quoted price for the rights

April 1- Nadayag Company paid the new shares charging the payment to the investment account. Since Nadayag Company felt that it has been assessed by Cortez Company, the dividends received from Cortez Company in 2017 and 2018 were credited to the investment account until the debit for payment of the new share was fully offset

Dec 31-Nadayag received annual dividend of P250,000 from Cortez Company

2019

Dec 31-Nadayag received annual dividend of P250,000 from Cortez Company

2020

Jan 1- Nadayag Company received 50% share dividend from Cortez Company. On the same date, the shares received as share dividend were sold at P160 per share and all proceeds were credited to income

Dece 31- The shares of Cortez Company were split 2 for 1. Nadayag Company found that each new share was worth P5 more than P110 paid for the original shares. Accordingly, Nadayag Company debited the investment account with additional shares received at P110 per share and credited to income

2021

June 30-Nadayag Company sold one half of the investment at P92 per share and credited the proceeds to investment account

Requirement:

1.What is the balance of the investment on December 31, 2020 as it was kept by Nadayag Company?

2. Using the average method, what is the correct balance of the investment on December 31, 2020?

3. What amout of gain on sales of investment should be reported in 2020?

Answer rating: 100% (QA)

1 Balance of the investment on December 31 2020 would be P124900 Naday... View the full answer