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Compute the carrying value of the investment on December

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Reference no: EM133080030

Question - Ophelia Corporation bought 40% of Loki Corporation's outstanding common stocks on January 1, 2020 for P4,000,000. The carrying amount of Loki's net assets at the date of purchases totaled P9,000,000. Fair values and carrying amounts were the same for all items except for plant and inventory, for which fair values exceeded their carrying amounts by P1,500,000 and P100,000, respectively. The plant has a 15-year life. The inventories were not sold in 2020. During the year, Loki reported net income of P1,200,000 and paid dividends of P200,000.

Required -

a. Compute the investment income in 2020?

b. Compute the carrying value of the investment on December 31, 2020?

Reference no: EM133080030

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