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What is the balance of investment income account

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Question - On January 1, 2016, King Company purchases 80% of the outstanding stock of Star Company at a cost of P800,000. On that date, Star Company's shareholder's equity amounted to P800,000.On April 1, 2016, King Company sold equipment with a book value of P50,000 to Star Company for P90,000. The gain included in the 2016 net income of King Company. The equipment is expected to have a remaining useful life of five years. For 2016, the net income from own operations are: King Company - P500,000 and Star Company - P262,500. King Company used the equity method to account for its investment in Star Company. For 2016, what is the balance of Investment income account in the books of King Company?

a. P172,000

b. P176,000

c. P271,000

d. P170,000

Reference no: EM132968098

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