Reference no: EM132918222

Question - At the beginning of current year, Compania Company acquired 25% of the outstanding shares of an investee at a total cost of P8,400,000. At the time, the carrying amount of the net assets of Compania Company totalled P28,800,000.

The investee owned equipment with 5-year remaining life and with a fair value of P2,400,00O more than carrying amount. The investee owned land with a fair value of P1,200,000 more than carrying amount. During the current year, the investee sold the land.

At year-end, the investee reported net income of P6,000,000 declared and paid a cash dividend of P3,600,000 to shareholders at year-end. The fair value of the investment at year-end is P9,000,000.

-How much is the investment income to be reported at the end of the current year?

-How much is the carrying amount of the investment at year-end?

-How much is the implied goodwill from acquisition?

-What is the entry to record the excess of cost due to overvaluation of equipment for the current year?

-What is the entry to record the receipt of cash dividend by Compania? Prepare other necessary journal entries if you can.