Shak Company acquired a financial instrument for P4,000.000 on March 31, 2020. The financial instrument is classified as financial asset at fair value through other comprehensive income The direct acquistion cost incurred amounted to P700,000. On December 31, 2020, the fair value of the instrument was P5,500,000 and the transaction costs that would be incurred on the sale of the investment are estimated at P600,000. What gain should be recognized in statement of financial position for the year ended December 31, 20207 Select the correct response 900.000 200.000 800,000

Shak Company acquired a financial instrument for P4,000.000 on March 31, 2020. The financial instrument is classified as financial asset at fair value through other comprehensive income The direct acquistion cost incurred amounted to P700,000. On December 31, 2020, the fair value of the instrument was P5,500,000 and the transaction costs that would be incurred on the sale of the investment are estimated at P600,000. What gain should be recognized in statement of financial position for the year ended December 31, 20207 Select the correct response 900.000 200.000 800,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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During 2021, Cullumber Company purchased the net assets of Riverbed Corporation for $2206600. On the date of the transaction, Riverbed had $601800 of liabilities. The fair value of Riverbed's assets when acquired were as follows: Current assets $1083240 Noncurrent assets 2527560 $3610800 How should the $802400 difference between the fair value of the net assets acquired ($3009000) and the cost ($2206600) be accounted for by Cullumber? O The current assets should be recorded at $1083240 and the noncurrent assets should be recorded at $1725160. O A deferred credit of $802400 should be set up and then amortized to income over a period not to exceed forty years. O The $802400 difference should be recognized as a gain. O The $802400 difference should be credited to retained earnings.
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