Reference no: EM132791838
Venezuela Company acquired 40% interest in an associate, Caracas Company, for P5,000,000 on January 1, 2020. At the acquisition date, there were no differences between fair value and carrying amount of identifiable assets and liabilities. Caracas Company reported net income of P2,000,000 for 2020 and P3,000,000 for 2021. On December 31, 2020 and 2021, Caracas Company paid cash dividend of P800,000 and P1,000,000, respectively. On January 1, 2020, Caracas Company sold an equipment costing P500,000 to Venezuela Company for P800,000. Venezuela Company applies a 10% straight line depreciation. On June 30, 2021, Caracas Company sold an equipment for P900,000 to Venezuela Company. The carrying amount of the equipment is P500,000 at the time of sale. The remaining life of the equipment is 5 years and Venezuela Company uses the straight line depreciation. On November 30, 2021, Caracas Company sold an inventory to Venezuela Company for P2,800,000. The inventory had a cost of P2,000,000 and was still on hand on December 31, 2021.
Problem 1: What is the investment income in 2021?
Problem 2: What is the carrying amount of the investment in associate on December 31, 2021?
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