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Determine the investment income

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Reference no: EM132857385

Question - On January 1, 2017, Karen Company acquired a 25% interest in the ordinary shares of Klaire Company for Php 3,000,000 which reflected a book value as of that date. Klaire Company reported net income and paid dividends for 2017 and 2018 as follows:

 

2017

2018

Net Income

Php 1,000,000

Php 1,500,000

Dividends Declared

Php 400,000

Php 700,000

Case 1 - On January 3, 2017, Karen Company sold an equipment costing Php 600,000 to Klaire Company for Php 800,000.

Case 2 - On January 3, 2017, Klaire Company sold an equipment costing Php 400,000 to Karen Company for Php 600,000.

Required - Based on above data and assume a tax rate of 30%, answer independently under each cases the following:

1. Determine the Investment Income 2017?

2. Determine the Investment Income 2018?

Reference no: EM132857385

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