Reference no: EM133168085
Question - Use the following information for the next four questions: On December 1, 20x1, Love Co. declared the distribution of its investment in associate, consisting of 100,000 shares of Happy Co., as property dividends. The investment has a carrying amount of P1,800,000. The date of distribution is on January 15, 20x2. The investment has the following fair values: P1,650,000 on December 1, 20x1; P1,950,000 on Dec. 31, 20x1, and P2,050,000 on Jan. 15, 20x2. The investment qualifies for accounting under PFRS 5. The costs to distribute are negligible.
1. What amount is debited to retained earnings on Dec. 1, 20x1?
a. 1,800,000 b. 1,650,000 c. 150,000 d. 0
2. What amount of gain (loss) is recognized in profit or loss on Dec. 31, 20x1?
a. 300,000 b. 200,000 c. 150,000 d. 0
3. How much is the gain (loss) on the distribution of dividends?
a. 300,000 b. 250,000 c. 100,000 d. 0
4. What is the net effect of the dividend declaration and distribution to Love Co.'s retained earnings?
a. 1,800,000 Dr.. b. 1,650,000 Dr. c. 250,000 Cr. d. 0
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