Reference no: EM132946048
Question - On January 1, 2014, 90% of Power Co. was purchased by Saw Co. for P550,000. On that day the equity of Power consisted of capital of P200,000 and retained earnings of P300,000. All assets and liabilities of Power were fairly valued.
By January 1, 2020, the retained earnings of Saw had increased to P500,000 while Power's reported retained earnings of P465,000. For 2019 Saw reported CI of P100,000 and paid dividends of P20,000. For 2020 Saw reported CI of P120,000 and paid dividends of P30,000 while Power reported CI of P80,000 and dividends of P12,000.
On October 31, 2019, Saw sold to Power land and a warehouse on it. The land had cost Saw P20,000; the warehouse had a book value of P40,000. Power paid P25,000 for the land and P20,000 for the warehouse. It estimates that the warehouse has a remaining life of 2 years.
Under the equity method, what is the balance of the Investment Income account on December 31, 2020?
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