Reference no: EM132517970

Question 1: On January 1, 2021, ABC Company acquired 40,000 out of 100,000 outstanding common stocks of DEF Company at a cost of P2,000,000. On such date, the net assets of DEF Company is reported at P6,000,000. All assets of DEF are properly valued on such date. DEF Company reported the following:

Year Net Income (Net Loss) Dividend declaration

2021 (2,000,000) None

2022 (5,000,000) None

2023 10,000,000 1,500,000

What is the investment loss to be reported by ABC Company for the year ended December 31, 2022?

a.(P2,000,000)

b. (P1,200,000)

c.(P1,600,000)

d.(P2,400,000)

Question 2: Using the same data in number 1, what is the investment income to be reported by ABC Company for the year ended December 31, 2023?

a. P600,000

b. P4,000,000

c. P3,200,000

d.P3,600,000