Allapacan Company bought 20% of Amulung Corporation's ordinary shares on July 1, 2019 for P20,000,00O. 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 profit 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 July 1, 2019 for P20,000,00O. 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 profit of P40,000,000 and paid a P15,000,000 cash dividend. What amount should Allapacan report as investment income for 2019?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Allapacan Company
Transcribed Image Text:Allapacan Company bought 20% of Amulung Corporation's ordinary
shares on July 1, 2019 for P20,000,00O. 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 profit of
P40,000,000 and paid a P15,000,000 cash dividend.
What amount should Allapacan report as investment income for
2019?
O P6,200,000
O P3,400,000
O P6,400,000
P2,700,000
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