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What amount of investment income should be reported

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Question - On January 4, 2014, Penny Corp. paid P2,592,000 for 40,000 shares of Raj Inc. ordinary shares. The book value of Raj's assets was P6,400,000 on the date of acquisition.

The investment represents a 30% interest in the net assets of Raj Inc. and gave Penny the ability exercise significant influence over Raj. Penny received dividends of P6 per share on December 4, 2014, and Raj reported net income of P1,280,000 for the year ended December 31, 2014. The market value of Raj's shares at December 31, 2014 was P64 per share with cost to sell at a minimal amount.

You also ascertain the following information:

On January 4, 2014, the fair value of Raj' depreciable assets, with an average meaningful life of 8 years, exceeded their book value by P640,000. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributed to an unidentifiable asset.

What amount of investment is attributable to goodwill?

What amount of investment income should be reported in Penny's income statement for the year-ended December 31, 2014?

What is the carrying value of investment in Raj's ordinary share on December 31, 2014?

Reference no: EM132973086

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