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    Dante Nas Jocom
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    A Company acquired 30% of R Company for $5 million in 2020. R Company reported profits of $4 million and $6 million in 2020 and 2021 respectively, but paid no dividends. In 2022, A Company sold half its investment for $4.48 million. The fair value of the remaining investment was $4.5 million in July 2022 and $4.85 million in December 2022, resulting in unrealized gains of $500,000 and $350,000 respectively, for a total unrealized gain of $850,000 reported on other comprehensive income for 2022.

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    A Company acquired 30% of R Company for $5 million in 2020. R Company reported profits of $4 million and $6 million in 2020 and 2021 respectively, but paid no dividends. In 2022, A Company sold half its investment for $4.48 million. The fair value of the remaining investment was $4.5 million in July 2022 and $4.85 million in December 2022, resulting in unrealized gains of $500,000 and $350,000 respectively, for a total unrealized gain of $850,000 reported on other comprehensive income for 2022.

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    6 views1 page

    Problem 11

    Uploaded by

    Dante Nas Jocom
    A Company acquired 30% of R Company for $5 million in 2020. R Company reported profits of $4 million and $6 million in 2020 and 2021 respectively, but paid no dividends. In 2022, A Company sold half its investment for $4.48 million. The fair value of the remaining investment was $4.5 million in July 2022 and $4.85 million in December 2022, resulting in unrealized gains of $500,000 and $350,000 respectively, for a total unrealized gain of $850,000 reported on other comprehensive income for 2022.

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    Problem 10: On January 1, 2020, A Company acquired 30% of the voting share capital of R Company for

    5,000,000 which was equal to the book value of interest acquired. The investee reported net profit of
    4,000,000 for 2020 and 6,000,000 for 2021 but paid no dividends during the two-year period. On July 1,
    2022, A Company sold ½ of the investment for net proceeds of 4,480,000. The fair value of the
    remaining investment was 4,500,000 on July 1, 2022 and 4,850,000 on December 31, 2022. The
    remaining investment is to be held at fair value through other comprehensive income. How much is the
    unrealized gain on equity reported on the 2022 other comprehensive income?

    5M
    4M x .30= 1.2M
    6M x .30= 1.8M
    8M/2= 4M
    July4.5M-4M= 500k
    Dec.4,850M-4.5M= 350k
    850k

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