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What is the total income to be recognized by line inc

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Reference no: EM132742992

LINE Inc., a small and medium enterprise, acquired 20,000 ordinary shares out of 100,000 ordinary shares of BDO Inc., a publicly traded entity in Philippine Stock Exchange on January 1, 2014. LINE Inc. purchased the BDO ordinary shares at P20/share. LINE incurred transaction costs totaling P50,000. LINE Inc. presents financial statements based on PFRS for SMEs. It decided to select fair value method in accounting for its investment in associate. BDO reported P900,000 net income and declared a total of P300,000 cash dividends during 2014. On December 31, 2014, the ordinary shares of BDO are trading at P30/share. The cost of selling the investment is P150,000.

REQUIRED:

Problem 1. What is the initial amount recognized by LINE Inc. for its Investment in BDO Inc. on January 1, 2014?

Problem 2. Using the same data in number 1, what is the total income to be recognized by LINE Inc. from its investment in BDO for the year ended December 31, 2014?

Problem 3. Using the same data in number 1, what is the carrying value of Investment in BDO as of December 31, 2014?

Problem 4. Using the same data in number 1, except that LINE decided to use equity method, what is the initial amount recognized by LINE Inc. for its Investment in BDO Inc. on January 1, 2014?

Problem 5. Using the same data in number 1, except that LINE decided to use equity method, what is the total income to be recognized by LINE Inc. from its investment in BDO for the year ended December 31, 2014?

Problem 6. Using the same data in number 1, except that LINE decided to use equity method, what is the carrying value of Investment in BDO as of December 31, 2014?

Reference no: EM132742992

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