Reference no: EM132901124
On January 1, 2020, Mahal Kita Company purchased 40% of the outstanding ordinary shares of Sinta Company, paying P19,200,000 when the carrying amount of the net assets of Sinta Company equaled P37,500,000. The difference was attributed to equipment which had a carrying amount of P9,000,000 and a fair market value of P15,000,000 and to building which had a carrying amount of P7,500,000 and a fair value of P12,000,000. The remaining useful life of the equipment and building was 4 years and 12 years, respectively.
- During 2020, Sinta Company reported net income of P15,000,000 and paid cash dividend of P7,500,000.
Problem 1: What is the excess of cost over the carrying amount of the net assets acquired?
a. P9,000,000 c. P15,000,000
b. P 0 d. P4,200,000
Problem 2: What is the amount of investment income for 2020?
a. P5,400,000 c. P6,000,000
b. P5,250,000 d. P3,000,000
Problem 3: What is the carrying amount of the investment in associate on December 31, 2020?
a. P21,450,000 c. P19,200,000
b. P22,200,000 d. P24,450,000
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