Allapacan Company bought 20% of Amulung Corporation’s ordinary shares on January 1, 2019 for P20,000,000. Carrying amount of Amulung’s net assets at purchase date totaled P60,000,000. Fair value and carrying amounts were the same for all items except for plant and inventory, for which fair values exceed their carrying amounts by P15,000,000 and P5,000,000 respectively. The plant has a 5-year life. All inventory was sold during 2019. Goodwill, if any, has an indefinite life. During 2019, Amulung reported net income of P40,000,000 and paid a P15,000,000 cash dividend. What amount should Allapacan report as investment income for 2019?
Allapacan Company bought 20% of Amulung Corporation’s ordinary shares on January 1, 2019 for P20,000,000. Carrying amount of Amulung’s net assets at purchase date totaled P60,000,000. Fair value and carrying amounts were the same for all items except for plant and inventory, for which fair values exceed their carrying amounts by P15,000,000 and P5,000,000 respectively. The plant has a 5-year life. All inventory was sold during 2019.
What amount should Allapacan report as investment income for 2019?
A. P7,600,000
B. P6,400,000
C. P6,200,000
D. P3,000,000
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