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What amount should rain record acquisition of droplets

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Reference no: EM132942855

On March 31, 2020, RAIN Company acquired 20,000 shares of Droplets Company at 120 per share. Droplets Company have 80,000 shares outstanding with a carrying amount of 7,500,000. Accordingly, any excess of cost over carrying amount is attributable to an equipment with remaining useful life of 10 years. Droplets Company recorded earnings of P3,600,000 and a loss of 1,100,000 for 2020 and 2021 respectively, and paid cash dividends of 14 per share in 2020 and 6 in 2021.

REQUIREMENTS:

Problem 1. What amount should Rain record its acquisition of Droplets Company's shares?

Problem 2. Compute for the investment income (loss) in 2020

Problem 3. What is the carrying value of the investment in associate at year end 2020?

Problem 4. Compute for the investment income (loss) in 2021

Problem 5. What is the carrying value of the investment in associate at year end 2021?

Reference no: EM132942855

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