Chapter 20 Separate Financial Statements

Multiple Choice Theory

1. D
2. A
3. A
4. D
5. D
Multiple Choice Computational
Answers at a glance:
1. D
2. A
3. B
4. D
Solutions:
1. D
2. A
Solution:
Investment in subsidiary (XYZ, Inc.) at cost

4,000,000

3. B
Solution:
Investment in associate (Alphabets, Co.)
at Fair value on Dec. 31, 20x1

420,000

4. D
Solution:
Investment in subsidiary (XYZ, Inc.)
Dividend revenue (1,200,000 x 80%)

960,000

Investment in associate (Alphabets Co.)

Dividend revenue (800,000 x 20%)
Unrealized gain on change in fair value (420K 400)
Transaction costs expensed immediately
Net investment income
(960,000 + 100,000) = 1,060,000

105

40,000
20,000
(
80,000)
100,000

Exercises
1. Solutions:
Requirement (a): Carrying amount in consolidated financial
statements
None, the investment in subsidiary is eliminated and not presented
in the consolidated financial statements.
Requirement (b): Carrying amount in separate financial
statements
Investment in subsidiary at cost
P2,000,000
Investment in associate at Fair value on Dec. 31, 20x1

P 210,000

Requirement (c): Investment income in separate financial

statements
Investment in subsidiary:
Dividend revenue (P600,000 x 80%)
P 480,000
Investment in associate:
Dividend revenue (P400,000 x 20%)
Unrealized gain on change in fair value (P210K P200)
Transaction costs expensed immediately
Net investment income

106

P
(
P

80,000
10,000
40,000)
50,000