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What is the book value of the investment in entity c to be

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Reference no: EM132814764

On January 1, 20x20, Entity A, an SME and Entity B, an SME, incorporated Entity C by investing P1,000,000 each for 50% interest. For the year ended December 31, 20x20, Entity C reported net income of P400,000 and distributed dividends to common stockholders amounting to P100,000. On December 31, 20x20, Entity B estimated that the fair value of its investment in Entity C is P1,500,000. The cost of selling this investment is estimated at 30%. The value in use of the investment based on discounted cash flows of the investment is P1,100,000.13.

Problem 1: What is the book value of the Investment in Entity C to be reported in the statement of financial position of Entity B as of December 31, 20x20 under the Equity Model?

a. 1,100,000

b. 1,500,000

c. 1,150,000

d. 1,050,000

Problem 2: What is the book value of the Investment in Entity C to be reported in the statement of financial position of Entity B as of December 31, 20x20 under the Fair Value Model?

a. 1,100,000

b. 1,500,000

c. 1,150,000

d.1,050,000

Reference no: EM132814764

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