Reference no: EM132982935
Question - On January 1, 2020, Mahal Kita Company purchased 40% of the outstanding ordinary shares of Sinta Company, paying P19,200,000 when the carrying amount of the net assets of Sinta Company equaled P37,500,000. The difference was attributed to equipment which had a carrying amount of P9,000,000 and a fair market value of P15,000,000 and to building which had a carrying amount of P7,500,000 and a fair value of P12,000,000. The remaining useful life of the equipment and building was 4 years and 12 years, respectively.
During 2020, Sinta Company reported net income of P15,000,000 and paid cash dividend of P7,500,000.
1. What is the excess of cost over the carrying amount of the net assets acquired?
a. P9,000,000 c. P15,000,000
b. P 0 d. P4,200,000
2. What is the amount of investment income for 2020?
a. P5,400,000 c. P6,000,000
b. P5,250,000 d. P3,000,000
3. What is the carrying amount of the investment in associate on December 31, 2020?
a. P21,450,000 c. P19,200,000
b. P22,200,000 d. P24,450,000
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