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Problem 18-7 (AICPA Adapted) On January 1, 2019, Mega Company acquired 10% of the outstanding ordinary shares of Penny Company for P4,000,000. The investment was under cost method. appropriately accounted for On January 1, 2020, Mega gained the ability to exercise significant influence over Penny by acquiring an additional 20% of Penny's outstanding ordinary shares for P10,000,000. financial and operating control of The fair value Penny's net assets equaled carrying amount. The fair value of the 10% interest on January 1, 2020 was P6,000,000 For the years ended December 31, 2019 and 2020, the investee reported the following: 2019 2020 Dividend paid Net income 2,000,000 6,000,000 3,000,000 6,500,000 1. What is the investment income in 2019? 200,000 b. 400,000 600,000 300,000 a. C. 2. What is the investment income in 2020? 1,300,000 b. 1,950,000 c. 1,000,000 d. 1,900,000 3. What is the carrying amount of the investment in associate on December 31, 2020? 16,000,000 b. 17,050,000 c. 15,050,000 d. 16,700,000 . 473