What is the carrying amount of the investment

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Question - At the beginning of current year, Farah Company acquired 20% of the outstanding ordinary shares of another entity for P8,000,000.

This investment gave Farrah the ability to exercise significant influence over the investee. The carrying amount of the acquired shares was P6,000,000.

The excess of cost over carrying amount cannot be attributed to any particular identifiable asset.

The investee reported net income of P1,800,000 and paid cash dividend of P400,000 and thereafter issued 5% share dividend during the year.

Required - What is the carrying amount of the investment in associate at year-end?

a. 6,280,000

b. 7,800,000

c. 8,000,000

d. 8,280,000

Reference no: EM132525581

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