Reference no: EM132505930

Point 1: On January 1, 2030, Entity X, an SME, acquired 25% of the voting shares of Entity B for P100,000. Entity A incurred transaction costs of P1,000 in acquiring these shares. As a result of this acquisition, Entity A is able to exercise significant influence over Entity B.

Point 2: In January 2030, Entity B declared and paid dividend of P 20,000. No further dividends were paid in 2031 and 2032. There is no published price quotation for the share capital of Entity B. At December 31, 2030, 2031 and 2032, in accordance with the requirement for impairment testing, management of Entity A assessed that the fair values of the Investment in Entity B as P102,000, P 110,000 and P 90,000 respectively. Costs to sell are estimated at P 4,000 throughout.

Question 1: At what amount should Entity A present its investment in Entity B at December 31, 2030, 2031 and 2032, respectively?

a. P 98,000; P 101,000; P 86,000

b. P 100,000; P 100,000; P 100,000

c. P 101,000; P 101,000; P 101,000

d. P 102,000; P 110,000; P 90,000