Reference no: EM132981078
Question - On January 4, 2012, TOMATO CORP. paid P1,296,000 for 40,000 ordinary shares of Baron Company. The investment represents a 30% interest in the net assets of Baron and gave Tomato the ability to exercise significant influence over Baron's operating and financial policy decisions. Tomato received dividends of P1 per share on December 4, 2012, and Baron reported net income of P640,000 for the year ended December 31, 2012. The market value of Baron's ordinary shares at December 31, 2012, was P32 per share. The book value of Baron's net assets was P3,200,000 and:
The fair market value of Baron's depreciable assets, with an average remaining useful life of 8 years, exceeded their book value by P320,000.
The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill.
What is the carrying value of the investment in Baron ordinary shares on December 31, 2012?
A. P1,280,000
B. P1,436,000
C. P1,296,000
D. P1,368,000
What amount of investment revenue should be reported in Tomato's income statement for the year ended December 31, 2012?
A. P120,000
B. P108,000
C. P180,000
D. P192,000