Reference no: EM132975960

Question - At the beginning of current year, an entity acquired 40% of the outstanding ordinary shares of an associate. On such date, assets and liabilities of the investee were recorded at fair value and the acquisition showed that goodwill of 1,000,000 was acquired. The investee reported net income of 8,000,000 for the current year.

In December, the investee sold inventory costing 3,000,000 to the investor for 5,000,000. The inventory remained unsold by the investor at year-end.

At the beginning of current year, the investee sold an equipment to the investor with carrying amount of 2,500,000 for 4,000,000. The remaining life of the equipment is 5 years.

Required - What amount of investment income should be reported for current year?

a. 3,200,000

b. 2,400,000

c. 1,920,000

d. 1,800,000