Reference no: EM132918294
Question - The following are the transaction for Ruthless Company for the years 2020 and 2021: A. On January 1, 2020, Ruthless Company acquired 30% of Pride Company's voting shares for P8,000,000 when the net assets acquired amounted to P25,000,000. At acquisition date, the carrying amounts of the identifiable assets and liabilities were equal to their face value, except the inventories, for which the fair value was P3,000,000 greater than its carrying amount. All of the inventories were sold during 2020.
B. During 2020, Pride earned P5,00,000 and paid dividends of P2,000,000.
C. On January 1, 2021, Ruthless Company sold half of its investment in Pride Company for P5,000,000, resulting to loss of significant influence. On that date, the fair value of the retained investment is P5,500,000, and is measured at fair value through other comprehensive income.
D. Pride paid dividends of P2,500,000 on October 1, 2021 and reported earnings of P6,000,000 for the year-ended December 31, 2021. The fair value of the investment is P5,900,000 on December 31, 2021.
Required -
A. What total amount of income from the investments should be reported by the investor in the profit or loss for the year 2020?
B. What is the carrying amount of the investment to be reported for the year-ended 2020?
C. What is the carrying amount of the investment to be reported for the year-ended 2021?
D. What total amount of income from the investments should be reported by the investor in the profit or loss for the year 2021?
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