3. On January 1, 2018, Hina Company acquired as a long-term investment a 20% ordinary share interest in Shivani Company. Hina paid P7, 000,000 for this investment when the fair value of Shivani’s net assets was P35, 000,000. Hina can exercise significant influence over Shivani’s operating and financial policies. For the year ended December 31, 2018, Shivani reported net income of P4,000,000 and declared and paid cash dividends of P1,600,000. How much revenue from the investment should Hina report for 2018?
3. On January 1, 2018, Hina Company acquired as a long-term investment a 20% ordinary share interest in Shivani Company. Hina paid P7, 000,000 for this investment when the fair value of Shivani’s net assets was P35, 000,000. Hina can exercise significant influence over Shivani’s operating and financial policies. For the year ended December 31, 2018, Shivani reported net income of P4,000,000 and declared and paid cash dividends of P1,600,000.
How much revenue from the investment should Hina report for 2018?
4. On July 1, 2018, Melanie Company purchased 30,000 shares of Eagle Company’s 100,000 outstanding ordinary shares for P200 per share. On December 15, 2018, Eagle paid P400,000 in dividends to its ordinary shareholders. Eagle’s net income for the year ended December 31, 2018 was P1,200,000, earned evenly throughout the year. In its 2018 income statement, what amount of income from the investment should Denver report?
5. Savannah Company bought 40% of Diarra Company’s outstanding ordinary shares on January 1, 2018, for P4,000,000. The carrying amount of Diarra’s net assets at the purchase date totaled P9,000,000. Fair values and carrying amounts were the same for all items except for plant and inventory, for which fair value values exceeded their carrying amounts by P900,000 and P100,000, respectively. The plant has an 18-year life. All inventory was sold during 2018. During 2018, Diarra reported net income of P1,200,000 and paid a P200,000 cash dividend.
What amount should Savanna report as investment income in its income statement for the year ended December 31, 2018?
6. On January 1, 2018, Sofya Company purchased 10-year bonds with a face value of P1,000,000 and a stated interest rate of 8% per year payable semiannually July 1 and January 1. The bonds were acquired to yield 10%. Present value factors are as follows:
PV of 1 for 10 periods at 10% .386
PV of 1 for 20 periods at 5% .377
PV of an annuity of 1 for 10 periods at 10% 6.145
PV of an annuity of 1 for 20 periods at 5% 12.462
What is the purchase price of the bonds?
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