Problem 10. On July 1, 2016, Hot Company purchased 80% of the outstanding shares of Issue Company at a cost of P1,600,000. On that date, Issue had P1,000,000 of share capital and P1,400,000 of accumulated profits. For 2016, Hot had income of P560,000 from its separate operations and paid dividends of P300,000. For 2016, Issue reported income of P130,000 and paid dividends of P60,000. All the assets and liabilities of Issue have book values equal to their respective fair market values. Assume income was earned evenly throughout the year except for the intercompany transaction on October 1. On October 1, 2016, Hot purchased an equipment from Issue for P200,000. The book value of the equipment on that date was P240,000. The loss of P40,000 is reflected in the income of Issue indicated above. The equipment is expected to have a useful life of 5 years from the date of sale