On January 1, 2021, Permission to Dance Co. acquired 20,000 ordinary shares out of the 100,000 outstanding ordinary shares of Butter Inc. forP5,000,000. Butter’s assets and liabilities approximate their fair values except for inventories with carrying amount of P600,000 and fair value of P650,000, machinery with carrying amount of P1,000,000 and fair value of P1,500,000 and land with carrying amount of P1,500,000 and fair value of P1,200,000. The remaining useful life of the machinery is 10 years. Butter’s net assets have a book value of P12,000,000. On December 31, 2021, Butter reported net income of P8,000,000 and declared and paid dividends of P2,000,000. How much is the carrying amount of the investment as of December 31, 2021?
On January 1, 2021, Permission to Dance Co. acquired 20,000 ordinary shares out of the 100,000 outstanding ordinary shares of Butter Inc. forP5,000,000. Butter’s assets and liabilities approximate their fair values except for inventories with carrying amount of P600,000 and fair value of P650,000, machinery with carrying amount of P1,000,000 and fair value of P1,500,000 and land with carrying amount of P1,500,000 and fair value of P1,200,000. The remaining useful life of the machinery is 10 years. Butter’s net assets have a book value of P12,000,000. On December 31, 2021, Butter reported net income of P8,000,000 and declared and paid dividends of P2,000,000. How much is the carrying amount of the investment as of December 31, 2021?
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