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What is the investment income for 2019?  What is the carrying amount of the investment in associate on December 31, 2019? What is the carrying amount of the investment in associate on December 31, 2020?

What is the investment income for 2019?  What is the carrying amount of the investment in associate on December 31, 2019? What is the carrying amount of the investment in associate on December 31, 2020?

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 24E
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What is the investment income for 2019? 

What is the carrying amount of the investment in associate on December 31, 2019?

What is the carrying amount of the investment in associate on December 31, 2020?

What is the investment income for 2020?

On January 1, 2019, an entity acquired 40% interest in an associate for P6,000,000. On this date, all of the identifiable assets and liabilities of the associate were recorded at fair value. The acquisition resulted in a goodwill of P300,000. The associate reported net income of P3,000,000 for 2019 and P4,000,000 for 2020. The associate paid cash dividend of P1,000,000 on December 31, 2019 and P1,500,000 on December 31, 2020. On January 1, 2019, the associate sold an equipment costing P500,000 to the investor for P800,000. The remaining life of the equipment is 3 years. In December 2019, the associate sold inventory to the investor for 900,000. The cost of the inventory was P400,000. The inventory remained unsold on December 31,2019 but was sold by investor in 2020.
Transcribed Image Text:On January 1, 2019, an entity acquired 40% interest in an associate for P6,000,000. On this date, all of the identifiable assets and liabilities of the associate were recorded at fair value. The acquisition resulted in a goodwill of P300,000. The associate reported net income of P3,000,000 for 2019 and P4,000,000 for 2020. The associate paid cash dividend of P1,000,000 on December 31, 2019 and P1,500,000 on December 31, 2020. On January 1, 2019, the associate sold an equipment costing P500,000 to the investor for P800,000. The remaining life of the equipment is 3 years. In December 2019, the associate sold inventory to the investor for 900,000. The cost of the inventory was P400,000. The inventory remained unsold on December 31,2019 but was sold by investor in 2020.
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