On January 1, 2020, Entity A acquired 90% of outstanding ordinary shares of Entity B at a price of P900,000. Entity A paid P20,000 costs related to acquisition of shares.

At the acquisition date, the net assets of Entity B were reported at P950,000. All the assets of Entity B are properly valued except for a machinery which is undervalued by P150,000. The machinery has a remaining useful life of 5 years.

For the year ended December 31, 2020, Entity B reported net income of P200,000 and declared dividends in the amount of P30,000.

The fair value of Investment in Entity B on December 31, 2020 is P1,000,000 while the cost of disposal is 5%.

Entity A voluntarily prepared its separate financial statements.

66.If Entity A elects cost method to account its Investment in Entity B in its separate financial statements, what is the carrying amount of the Investment in Entity B on December 31, 2020?

A.900,000

B.920,000

C.1,000,000

D.950,000

67.What is the investment income for 2020 if Entity A elects cost method to account its Investment in Entity B in its separate financial statements?

A.7,000

B.27,000

C.180,000

D.107,000

68.If Entity A elects fair value model to account its Investment in Entity B in its separate financial statements, what is the carrying amount of the Investment in Entity B on December 31, 2020?

A.900,000

B.920,000

C.1,000,000

D.950,000

69.What is the net effect in profit or loss for 2020 if Entity A elects fair value model to account its Investment in Entity B in its separate financial statements?

A.7,000

B.27,000

C.180,000

D.107,000