Solution-What is the journal entry to record the excess of

What is the journal entry to record the excess of cost

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Question - On January 1, 2020, Pretentious Company purchased 40% of the ordinary shares of another entity for P3,500,000 when the net assets acquired amounted to P7,000,000. At acquisition date, the carrying amounts of the identifiable assets and liabilities of the investee were equal to their fair value, except for equipment for which the fair value was P1,500,000 greater than its carrying amount and inventory whose fair value was P500,000 greater than its cost.

The equipment has a remaining life of 4 years and half of the inventory was sold during 2020.

The investee reported net income of P4,000,000 and paid P1,000,000 dividends during 2020.

A. How much is the carrying amount of the investment at year-end?

B. What is the journal entry to record the excess of cost due to overvaluation of inventory for the current year?

C. Prepare other necessary journal entries related to the problem.

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What is the journal entry to record the excess of cost

Reference no: EM132915852

Reference no: EM132915852

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