Auditing problems

PROBLEM NO. 6 On January 3, 2018, JR Company purchased for P 500,000 cash a 10% interest in Judi Corp. On that date the net assets of Judi had a book value of P 3,750,000. The excess of cost over the underlying equity in net assets is attributable to undervalued depreciable assets having a remaining life of 10 years from the date of JR's purchase. The investment in Judi Corp. was designated as FVTOCI. The fair value of JR's investment in Judi securities is as follows: December 31, 2018, P 570,000; December 31, 2019, P 525,000; December 31, 2020, P 2,200,000. On January 2, 2020, JR purchased an additional 30% of Judi's stock for P 1,575,000 cash when the book value of Judi's net assets was P 4, 150,000. The excess wasattributable to depreciable assets having a remaining life of 8 years. During 2018, 2019, and 2020 the following occurred: Judi Net Income Dividends Paid by Judi to JR 2018 350,000.00 P 15,000.00 2019 400,000.00 20,000.00 2020 550,000.00 70,000.00 Based on the above and the result of your audit, answer the following: 26 The net amount to be recognized in 2018 comprehensive income related to this investment? A P15,000 B P70,000 C P85,000 D P120,000 27 The net amount to be recognized in 2019 comprehensive income related to this investment? A P20,000 B (P 45,000) C (P 25,000) D P15,000 28 The adjustment to retained earnings as of January 1, 2020 as a result of the acquisition of the additional 30% interest in Judi Corp. is A P50,000 B P40,000 C P15,000 D nil 29 The carrying amount of the investment in Judi Corp. as of December 31, 2020 is A P2,200,000 B P2,195,000 C P2,190,000 D P2,100,000 30 Which of the following provides the best form of evidence pertaining to the annual valuation of an investment in which the independent auditor's client owns a 30% voting interest? A Market quotations of the investee company's stock. B Current fair value of the investee company's assets. C Historical cost of the investee company's assets. D Audited financial statements of the investee company