i

1. On January 1, 2020, Heaven Company acquired 20% of the ordinary shares of an associate for P6,000,000. On this date, all the identifiable assets and liabilities of the associate were recorded at fair value. An analysis of the acquisition showed that goodwill of P300,000 was acquired. The net income and dividend of the associate were as follows: 2020 2021 Net income 3,000,000 4,000,000 Dividends paid 1,000,000 1,500,000 In December 2020, the associate sold inventory to Heaven Company for P900,000. The cost of the inventory was P600,000. This inventory remained unsold by Heaven Company on December 31, 2020. However, it was sold by Heaven Company in 2021. In December 2021, the associate sold inventory to Heaven Company for P750,000. The cost of the inventory was P500,000. This inventory remained unsold by Heaven Company on December 31, 2021. Required: 1. Determine the investor's share in the profit of the associate for 2020. 2. Determine the investor's share in the profit of the associate for 2021. 3. Prepare journal entries on the books of Heaven Company in relation to the investment in associate. 4. Determine the carrying amount of the investment in associate on December 31, 2021