Which could be included in august company income before tax

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Reference no: EM132817009

On April 1, 2020, August Company purchased 40% of the outstanding shares of an associate for P 4,000,000.

On this date, the investee's net assets totaled P 8,000,000 and August Company cannot attribute the excess of cost of the investment over the equity in the investee's net assets to any particular factor. The investee reported net income of P 1,000,000 for the current year.

Question 1: What is the maximum amount which could be included in August Company's income before tax to reflect its "equity in earnings of the investee" for the current year?

A. P 270,000

B. P 360,000

C. P 300,000

D. P 400,000

Reference no: EM132817009

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