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What is the carrying value of mc investment in dc

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Reference no: EM132946044

On January 1, 2019, Yellow Company issued its P3,000,000, 8%, 5-year bonds that resulted in a bond conversion privilege of P100,000. The bonds are convertible to 20,000 ordinary shares with a par value of P100 per share.

  • On April 1, 2021,P1,200,000 bonds were converted to ordinary shares when the ordinary shares sell for P125 per share.

The conversion of the bonds to ordinary shares shall result to a net increase in share premium by:

  • On January 1, 2020, MC Company acquired 25% of the ordinary shares that carry voting rights at a general meeting of shareholders of DC Company for P400,000.
  • The purchase price is equal to the fair value of the 25% of DC's identifiable assets less 25% of its identifiable liabilities.
  • For the year ended 2020, DC Company recognized a loss of P2,400,000.
  • MC Company has no constructive or legal obligation in respect of its associate and has made no payment on its behalf. For the year ended 2021, DC Company recognized a profit of P3,200,000.

Problem 1: What is the carrying value of MC investment in DC as of December 31, 2021?

Reference no: EM132946044

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