Reference no: EM132703119
On January 1, 2019, Happy Company acquired 20% of the ordinary shares of an associate for P3,000,000. On this date, all identifiable assets and liabilities of the associate were recorded at fair value. An analysis of the acquisition showed that goodwill of P300,000 was acquired. The associate reported the following net income and dividends:
Net income
2019- 1,500,000
2020- 2,000,000
Dividends paid
2019- 500,000
2020- 750,000
- In December 2019, the associate sold inventory to Happy for P450,000. The cost of inventory was P300,000.
- The inventory remained unsold by happy on December 31, 2019. However, it was sold by Happy in 2020.
- In December 31, 2020, the associate sold inventory to Happy for P375,000. The cost of inventory was P250,000. The inventory remained unsold by Happy on December 31, 2020.
Question a. What is investor's share in the profit of the associate for 2019?
Question b. What is the investor's share in the profit of the associate for 2020?
Question c. What is the carrying amount of the investment in associate on December 31, 2020?
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