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1) On January 1, 2016, Horatio Company acquired a 30% interest in Mia Company for P300,000. The net assets of Mia Company at the time

1) On January 1, 2016, Horatio Company acquired a 30% interest in Mia Company for

P300,000. The net assets of Mia Company at the time of acquisition was P950,000. The

carrying amounts and the fair value of Mia Company's assets were the same except for a

plot of land whose fair value was higher by P100,000.

Mia Company has 40,000 P8 par value ordinary shares issued and outstanding at the time

of Horatio Company's acquisition. Likewise, Mia Company has 3,000 10% P40 par value

cumulative preference shares, all of which were outstanding throughout the year.

Mia Company reported a net income of P780,000 and declared dividends of which the

ordinary shares will receive P360,000

a. Investment income for 2016

b. Investment in associate - Mia Company at December 31, 2016

2) On January 1, 2016 Grisson Company acquired a 25% interest in LV Company and paid

P500,000. The following transactions between Grisson Company and LV Company are

provided below:

Inventory costing P40,000 was sold by LV Company to Grisson Company for P70,000.

40% of these goods were sold by Grisson Company as of December 31, 2016.

Inventory costing P40,000 was sold by Grisson Company to LV Company for

P130,000. 30% of these goods were sold by LV Company as of December 31, 2016.

LV Company's net income was P900,000 and dividends declared P300,000.

a. Investment income for 2016

b. Investment in associate - LV Company at December 31, 2016.

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