Alpha Company acquired 20,000 shares of Beta Company on January 1, 2021 at P120 per share. Beta Company had 80,000 shares outstanding with a carrying amount of P8,000,000.

The difference between the carrying amount and fair value of Beta Company on January 1, 2021 is attributable to a broadcast license intangible asset.

Alpha Company has a 20-year straight line amortization policy for the broadcast license.

Beta Company recorded earnings of P3,600,000 and P3,900,000 for 2021 and 2022, respectively, and paid per-share dividend of P16 in 2021 and P20 in 2022.

Required:

1. Compute the investment income for 2021.

2. Compute the investment income for 2022.

3. Determine the carrying amount of the investment in associate on December 31, 2022.

Answer rating: 100% (QA)

1 Compute the investment income for 2021 Total Earnings of Beta Company in 2021 P3600000 Alpha Comp... View the full answer