Reference no: EM132915526
Problem 1: MADDUMBA Company acquired 30% of Gonzaga Company's voting share capital for P2, 000,000 on January 1, 2016. Grant's 30% interest in Gonzaga gave MADDUMBA the ability to exercise significant influence over Gonzaga's operating and financial policies. During 2016, Gonzaga earned P800, 000 and paid dividends of P500,000 cash. Gonzaga reported earnings of P1, 000,000 on the 6 months ended June 30, 2017, and P 2,000,000 for the year ended December 31, 2017. On July 1, 2017, MADDUMBA sold half of its investments in Gonzaga for P1,500,000 cash. On such date, the investment is measured at fair value through other comprehensive income. Gonzaga paid dividends of P600,000 on October 1, 2017. The fair value of the retained investments is P1,600,000 on July 1, 2017 and P1,800,000 on December 31, 2017. What total amount should MADDUMBA include in profit or loss for 2017 from the investment?
A. 710,000
B. 305,000
C. 1,100,000
D. 910,000
E. Answer not given
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