Reference no: EM132661381
On January 1, 2019, Wind Company purchased 10,000 shares of Light Company ordinary shares for P600,000 plus broker's fees of P6,000. Light reported net income of P850,000 for the year ended December 31, 2019. At December 31, 2019, Light declared and paid cash dividends of P320,000. At January 1, 2020, Wind Company sold one-half of the investment in Light for P360,000 less broker's fees of P3,600. For the year ended December 31, 2020, Light reported net income of P980,000 and declared and paid cash dividends of P450,000.
Market value per share of Light ordinary share were as follows:
December 3,1 2019 P55
December 31, 2020 49
Instruction:
Problem 1: Prepare a? journal entries inclusive from January 1,2019 to December 31, 2020, assuming that:
- the shares acquired are only 1% of the outstanding stock of Light and thus, recorded by Wind as Trading Securities.
- the shares acquired represented 10% of the outstanding stock of Light and were initially recorded by Wind as Available for Sale Securities.
- the shares acquired represented 25% of the outstanding stock of Light and Wind has an ability to exercise significant influence over the financial and operating policies of Light.
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