Reference no: EM132791163

Problem 1: On January 1, 2020 Maria Company purchased 30% interest in Venus Company for P5,000,000. On this date Venus' stockholders' equity was P10,000,000. The carrying amounts of Venus' identifiable net assets approximated their fair values, except for building whose fair value exceeded its carrying amount by P4,000,000. The remaining life of the building is six years from January 1, 2020. Any implied goodwill has an indefinite life. Venus reported net income of P3,000,000 for 2020 and paid dividends of P1,000,000. Maria accounts for this investment using the equity method. In its December 31, 2020 balance sheet, what amount should Maria report as investment in associate?

Option 1: 5,560,000
Option 2: 5,540,000
Option 3: 5,400,000
Option 4: 5,600,000