Question: QUIZZER NO. 2: Provide solution. (20 minutes) On January 1, 2019, Entity X, a public entity, and Entity Y, a public entity, incorporated Entity Z

QUIZZER NO. 2: Provide solution. (20 minutes)

On January 1, 2019, Entity X, a public entity, and Entity Y, a public entity, incorporated Entity Z by investingP3,000,000 and P2,000,000. Capital interest ratio for X and Y is 60:40. The contractual agreement of the incorporatingentities provided that the decisions on relevant activities of Entity Z will require the unanimous consent of bothentities. Entity X and Entity Y will have rights to the net assets of Entity Z.

The financial statements of Entity Z provided the following data for 2019:

Entity Z reported net income of P1,000,000 for 2019 and paid cash dividends of P400,000 on December31, 2019.

During 2019, Entity C sold inventory to Entity X with gross profit of P50,000. Eight percent of thoseinventories were resold by Entity X to third persons during 2019 and the remainder was resold to thirdpersons during 2020.

On July 1, 2019, Entity Z sold a machinery to Entity Y at a loss of P20,000. At the time of sale, themachinery has remaining useful life of 2 years.

What is the investment income to be reported by Entity X for the year ended December 31, 20x20?

What is the balance of Investment in Entity Z to be reported by Entity Y on December 31, 20x20?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

QUIZZER NO. 2: Provide solution. (20 minutes) On January 1, 2019, Entity X, a public entity, and Entity Y, a public entity, incorporated Entity Z by investing P3,000,000 and P2,000,000. Capital...

I just need a solution for this as soon as possible. Thank you. 200109 Corporate Accounting Systems Autumn 2017 Practical Project Due Date: Assessment Value: Topic: Length: Friday 5 May 2017 (week...

Part A (50%) The World Retailing Ltd acquires 80 per cent of the shares of Mark Construction Ltd on 30 June 2019 for a consideration of $584 000. The share capital and reserves of Mark Construction...

analyze case study 1 of 12 IVEY | Publishing 9B21M035 ECOBANK GHANA: CHANGE MANAGEMENT IN AN ACQUISITION Helene M. Adde and Kwesi Amponash-Tawiah wrote this case solely to provide material for cless...

Hi! I need help for this assignment, please let me know if WEEK 6 WILEYCPA Ownership of 51% of the outstanding voting stock of a company would usually result in The use of the cost method. The use of...

Need ONLY an answer to Part C, step 1, questions 1 and 3. Term Project Part A: Understanding Financial Statements Locate and use an annual report STEP 1: The Company Assigned to you Find the most...

Let a.pai be the area of the region bounded by the curve defined by the parametric equations x = 7 cos 3t, y = 7 sin 3t, where 0

McDonalds Corporation is a well-known fast-food restaurant company. Examine the accompanying balance sheet values, which are based on McDonalds condensed quarterly report and actual terminology:...

Maurice Corporation has two major business segments; Philippe and Chip. In April, the Philippe business segment had sales revenues of $500,000, variable expenses of $280,000, and traceable fixed...

Free cash flow valuation You are evaluating the potential purchase of a small business with no debt or preferred stock that is currently generating $ 4 2 , 7 0 0 of free cash flow ( F C F 0 = $ 4 2 ,...