Reference no: EM132833357
Problem - On January 1, 2020, Peru Company acquired 10% of the outstanding ordinary shares of Lima Company for P4,000,000. The investment was appropriately accounted for under cost method.
On January 1, 2021, Peru gained the ability to exercise significant influence over financial and operating control of significant influence over financial and operating control of Lima by acquiring an additional 20% of Lima's outstanding ordinary shares for P10,000,000. The fair value Lima's net assets equaled carrying amount. The fair value of the 10% interest on January 1, 2021 was P6,000,000.
For the years ended December 31, 2020 and 2021, the inivestee reported the following:
|
|
2020
|
2021
|
|
Dividend paid
|
2,000,000
|
3,000,000
|
|
Net income
|
6,000,000
|
6,500,000
|
Required -
1. What is the investment income in 2020?
2. What is the carrying amount of the investment in associate on December 31, 2021?
3. What is the investment income in 2021?