Investment in Associate
1. On January January 1 2017, Saxe Compan Company y purchased purchased 20% of Lex Company’ Company’ss ordinary ordinary shares shares outstandi outstandin n for !",000,000. #he ac$uision cost is e$ua& to the carryin amount of the net assets ac$uired. 'urin 'urin 201 201(, (, the in)es in)estee tee report reported ed net income income of !7,000 !7,000,00 ,000 0 and paid cash cash di)id di)idend end of !*,000,000. +hat is the a&ance in the in)estment in associate on 'ecemer (1, 2017-
2. On Januar January y 201 2017, 7, ar&ey ar&ey compa company ny ac$uir ac$uired ed 20% of the outsta outstandi ndin n ordina ordinary ry shares shares of 'a)is 'a)is Company for !/,000,000. #his in)estment a)e ar&ey the ai&ity to exercise sinicant inuence o)er 'a)is. #he carryin amount of the ac$uired shares as !",000,000. #he excess of cost o)er carryi carryin n amoun amountt as as a3ri a3riut uted ed to a deprec deprecia ia&e &e asset asset hich hich as under) under)a&u a&ued ed on 'a)is 'a)is’’ statement of nancia& posion and hich had a remainin usefu& &ife of ten years. or the year ended 'ecemer (1, 2017, the in)estee reported net income of !1,/00,000 and paid cash di)idends of !*00,000 and therea4er issued 5% stoc6 di)idend. +hat is the carryin amount of the in)estment in associate on 'ecemer (1, 2017-
(. On January January 1, 201 2017, 7, +e&& Compan Company y purcha purchased sed 10% of ea Compan Company’ y’ss outst outstand andin in ordina ordinary ry shares shares for !*,000,000. !*,000,000. +e&& +e&& is the &arest &arest sin&e shareho&d shareho&der er in ea and +e&&’s +e&&’s o8cers o8cers are ma9ority of ea’s oard of directors. #he in)estee reported net income of !5,000,000 for 2017 and paid di)idends of !1,500,000. On 'ecemer (1, 2017, hat amount shou&d e reported as in)estment in)estment in ea Company-
*. Om January January 1, 2017, :ean Compan Company y purchased purchased (0% interes interestt in !od Company Company for for !2,500,000. !2,500,000. On this date !od’s shareho&ders’ e$uity as !5,000,000. #he carryin amount of !od’s idena&e net assets approximated their fair )a&ues, except for &and hose fair )a&ue exceeded its carryin amount amount y !2,000,000. #he in)estee in)estee reported reported net income income of !1,000,000 for 2017 and paid no di)ide di)idends nds.. ;n 'ecem 'ecemer er (1, 201 2017 7 stat statemen ementt of nanci nancia& a& posio posion, n, hat hat amount amount shou&d shou&d e reported as in)estment in associate-
5. Sei6o Sei6o Compan Company y has 100,000 100,000 ordina ordinary ry shares shares outstan outstandin din. . <&oe <&oe Compan Company y ac$uir ac$uired ed (0, (0,000 000 shares shares of Sei6o Sei6o for !120 !120 per share share in 201*. #he securi securies es are ein ein he&d he&d as &on &on =term =term in)estment. in)estment. Chanes in retained earnins for Sei6o for 201" and 2017 are as fo&&os> etained ?arnins@decitA, January 1, 201"
@500,000A
Bet income for 201"
700,000
etained earnins, 'ecemer (1, 201"
200,000
Bet income for 2017
/00,000
Cash di)idend paid on 'ecemer (1, 2017 etained earnins, 'ecemer (1, 2017
@*00,000A "00,000
". Carryin amount ?$uipment 7,000,000 Fui&din 1,"00,000
Dar6et Ea&ue 5,"00,000 2,"00,000
#he e$uipment has a remainin usefu& &ife of 5 years, and the ui&din has a remainin usefu& &ife of 10 years. Jerry company reported net income of !(,200,000 and cash di)idends of !1,000,000 for 201". +hat is the in)estment income for 201"a.
1,183,000
. 1,120,000 c. 1,2"0,000 d. G/7,000 2. On January 1, 201", Occidenta& Company purchased *0% of the outstandin ordinary shares of Danap&a Company for !(,500,000 hen the net assets of Danap&a amounted to !7,000,000. t ac$uision date, the carryin amounts of the idena&e assets and &iai&ies of Danap&a ere e$ua& to t heir fair )a&ue, except for e$uipment for hich the fair )a&ue as !1,500,000 reater than its carryin amount and in)entory hose fair )a&ue as !500,000 reater than its cost. #he e$uipment has a remainin &ife of * years and the in)entory as a&& so&d durin 201". Danap&a company reported net income of !*,000,000 for 201" and paid no di)idends durin 201". +hat is the in)estment income for 201"a.
1,350,000
. 1,250,000 c. 1,"00,000 d. 1,700,000
