On January 1, 2023, Larry Company purchased 40% of the ordinary shares of Paula Company for...

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On January 1, 2023, Larry Company purchased 40% of the ordinary shares of Paula Company for P3,700,000 when the net assets of Paula amounted to P7,000,000. At acquisition date, the carrying amounts of the identifiable assets and liabilities of Paula were equal to their fair value, except for equipment for which the fair value was P2,000,000 greater than the carrying amount and inventory whose fair value was P600,000 greater than its cost. The equipment has a remaining life of 4 years, and the inventory at the date of acquisition was sold during 2023. Paula Company reported net income of P4,000,000 for 2023 and paid 1,500,000 dividends during 2023. 1. How much is the gain on bargain purchase? 2. What is the 2023 investment income? 3. What is the carrying amount of the investment in associate on December 31, 2023? On January 1, 2023, Larry Company purchased 40% of the ordinary shares of Paula Company for P3,700,000 when the net assets of Paula amounted to P7,000,000. At acquisition date, the carrying amounts of the identifiable assets and liabilities of Paula were equal to their fair value, except for equipment for which the fair value was P2,000,000 greater than the carrying amount and inventory whose fair value was P600,000 greater than its cost. The equipment has a remaining life of 4 years, and the inventory at the date of acquisition was sold during 2023. Paula Company reported net income of P4,000,000 for 2023 and paid 1,500,000 dividends during 2023. 1. How much is the gain on bargain purchase? 2. What is the 2023 investment income? 3. What is the carrying amount of the investment in associate on December 31, 2023?

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