On January 1, 2020 Iffy Corp. acquired 30,000 shares of ABC Corp's 100,000 shares outstanding for P5,000,000. The book value of ABC's identifiable net assets on this date was at P14M. All its assets carrying value approximated their fair values except for a depreciable assets with a remaining life of 5 years, which was undervalued on this date by P1.6M.

ABC reported total comprehensive income in 2020 at P4,000,000 which was net of a foreign exchange loss reported in as other comprehensive loss at P800,000. ABC also paid dividends at P1.5M at the end of the year, P500,000 of which is from pre-acquisition Retained Earnings. The fair market value of shares on this date was at P210 per share.

Requirements:

1. What is the carrying value of Iffy's investment in ABC shares as of December 31, 2020 using the appropriate accounting standards?

a. 5,990,000 c. 5,654,000 b. 5.750,000 d. 5,894,000

2. Assuming that Iffy Corp. is a medium-sized entity and that the company uses the fair value method in accounting for its investment in ABC, how much in total should be recognized in Iffy Corp.'s profit or loss for 2020?

a. 300,000 c. 1,300,000 b. 450,000 d. 1,750,000

3. Assuming that Iffy Corp. sold 18,000 shares of its ABC shares investment on December 31, 2020 at itsprevailing fair value, how much in total should be recognized in the profit or loss as a result of the transaction?

a. 646,000 c. 387,600 b. 406,000 d. 243,600

4. Using the information in the previous item, how much shall be the carrying value of any remaining investment as of December 31, 2020 a. 2,261,600 c. 2,300,000 b. 2,357,600 d. 2,520,000

5. Assuming that ABC issued 25,000 shares to other stockholders on Dec.=ember 31, 2020 at prevailing fair value without Iffy Corp's participation, how much should be recognized in the profit or loss as a result of the transaction/event?

a. None c. 129,200 b. 196,200 d. 81200