How much is net effect of the investment in Art Co profit

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Question - Art Co. owns 25,000 out of the 100,000 outstanding voting shares of Ritz Co. Art accounts for the investment, which has carrying amount of P1,300,000 on January 1, 20x1, under the investment at P140 per share-the fair value on this date. Art incurs transaction costs of P120,000 on the sale. Ritz reports profit of P4,200,000 for the year and declares cash dividends of P1,200,000 on December 31, 20x1. The profit is earned even during the year. Ritz's shares are selling P130 per share on December 31,20x1. How much is the net effect of the investment in Art Co.'s profit or loss in 20x1?

a. 2,092,500

b. 2,289,500

c. 2,236,500

d. 2,420,500

Reference no: EM133012068

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