On July 1, 2019, Investor Corp. acquired 8,000 shares of the outstanding, 40,000, P100 par, ordinary shares of Investee Corp. for P1,400,000. The net assets of Investee Corp. on this date are valued at P6,000,000. The excess of cost over book value is due to undervalued machinery with a remaining life of 5 years. Net Income of P1,500,000 which was earned evenly throughout the year was reported by Investee Corp. for 2019. No dividends were declared by Investee Corp. for 2019. Instead, special assessments of P5 per share were charged on the shareholders on December 1, 2019.

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Dividends are distributions of earnings by a corporation to its stockholders Usually the corporation pays dividends in cash but it may distribute additional shares of the corporations own capital stoc... View the full answer