Choose the correct answer: Westlife Company acquired on July 1, 2020, 30,000 ordinary shares of Lucy Company for P40 per share. Lucy has 100,000 outstanding ordinary shares on that date. Lucy’s net...

Choose the correct answer:

Westlife Company acquired on July 1, 2020, 30,000 ordinary shares of Lucy Company for P40 per share.   Lucy has 100,000 outstanding ordinary shares on that date.   Lucy’s net income for the year ended December 31, 2020 was P2,400,000, earned evenly throughout the year.    Lucy paid dividends in the amount of P800,000 to its ordinary shareholders at December 31, 2020.

            What  amount of income from the investment should Westlife report in its 2020 income statement? Remember the shares were acquired July 1 so right over the associate starts only from July 1.

1. P720,000                                c.         P240,000


2. P360,000                                d.         P120,000