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What is the carrying amount of the investment

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Reference no: EM132814370

Question - XYZ Company - On January 1, 2020, XYZ Company acquired 10% of the outstanding ordinary shares of STU Company for 4,000,000.

On January 1, 2021, XYZ gained the ability to exercise significant influence over the financial and operating control of STU by acquiring an additional 15% of STU's outstanding ordinary shares for 10,000,000.

The fair value of STU's net assets equaled carrying amount. The fair value of the 10% interest on January 1, 2021 was 6,000,000.

For the year ended December 31,2020 and 2021, the investor and investee reported the following:

Investor:

 

 

 

2020

2021

Dividends paid

2,500,000

2,000,000

Net income

11,000,000

11,500,000

Investee:

 

 

 

2020

2021

Dividends paid

1,000,000

5,000,000

Net income

7,000,000

14,500,000

Required - What is the carrying amount of the investment in associate on December 31, 2021?

Reference no: EM132814370

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