What is the carrying amount of the investment at year end

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Problem 1: At the beginning of the current year, Lemon Company purchased 40% of the outstanding ordinary shares of an investee paying ?2,560, 000 when the carrying amount of the net assets of the investee equaled ?5,000,000. The difference was attributed to building which had a carrying amount of ?1,000,000 and a fair market value of ?1,600,000, and to machinery with a carrying amount of ?1,200,000 and fair market value of ?2,000,000. The remaining useful life of the machinery and building was 4 years and 12 years, respectively. During the current year, the investee reported net loss of ?1,600,000 and paid dividends of ?1,000,000. What is the carrying amount of the investment in associate at year end?

a. ? 2,550,000

b. ? 2,700,000

c. ? 1,420,000

d. ? 1,270,000

Reference no: EM132945556

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