Reference no: EM132914452

Question - The following transaction transpire for Cura Company:

A. On January 1, 2019, acquired 15% interest in the unquoted shares of an investee for P4,500,000.

B. The investee reported net income of P5,000,000 for 2019 and paid dividend of P3,000,000 on December 31, 2019.

C. On January 1, 2020, Cura acquired further 20% interest in the investee for P9,000,000.

D. The fair value of the 15% interest was P6,750,000.

E. On the date of acquisition, the carrying amount of the net assets of the investee was P40,000,000. The fair value of the net assets of the investee is equal to carrying amount except for an equipment whose fair value exceeds carrying amount by P4,400,000. The equipment has a remaining life of 4 years.

F. The investee reported net income of P8,000,000 for 2020 and paid dividend of P5,000,000 on December 31, 2020.

Required -

Question 1: How much is the carrying amount of the investment on December 31, 2019?

Question 2: How much is the amount of income to be reported by the investor at year-end December 31, 2019?

Question 3: How much is the amount of income to be reported by the investor at year-end December 31, 2020?

Question 4: How much is the carrying amount of the investment on December 31, 2020?