Reference no: EM133132885

Question 1 - On January 1, 2022, ABC Company borrows P2,000,000 from XYZ National Bank at 11% annual interest. In addition, ABC Company is required to keep a compensatory balance of P200,000 on deposit at XYZ National Bank which will earn interest at 5%. The effective interest that ABC Company pays on its P2,000,000 loan is?

Question 2 - On January 2, 2021 XYZ Company purchased 15% of the outstanding ordinary shares of ABC, Inc. At the beginning of the year, XYZ already owns 10% the outstanding ordinary shares of ABC, Inc. with carrying amount of P150,000 and fair value of P156,000. During 2021 ABC, Inc. reported net income of P630,000 and distributed dividends of P270,000. The ending balance in the Equity Investments account at December 31, 2021 was P480,000 after applying the equity method during 2021. What was the purchase price XYZ Company paid for its investment in ABC, Inc?

Question 3 - XYZ, Inc. acquired 30% of ABC Corp.'s voting stock on January 1, 2012 for P600,000. During 2012, ABC earned P240,000 and paid dividends of P150,000. XYZ's 30% interest in ABC gives XYZ the ability to exercise significant influence over ABC's operating and financial policies. During 2013, ABC earned P300,000 and paid dividends of P90,000 on April 1 and P90,000 on October 1. On July 1, 2013, XYZ sold half of its stock in ABC for P396,000 cash. What should be the gain on sale of this investment in XYZ's 2013 income statement?