On March 1, 2017, Mindoro Company purchased 40% of the outstanding ordinary shares of Garapal Company for P3,500,000 when the net assets of Garapal amounted to P7,000,000. At acquisition date, the...

On March 1, 2017, Mindoro Company purchased 40% of the outstanding ordinary shares of Garapal Company for P3,500,000 when the net assets of Garapal amounted to P7,000,000. At acquisition date, the carrying amounts of the identifiable assets and liabilities of Garapal were equal to their fair value, except for equipment for which the fair value was P1,500,000 greater than its carrying amount and inventory whose fair value was P500,000 greater than its cost. The equipment has a remaining life of4 years and the inventory was all sold during 2017. Garapal Company reported net income of P5,000,000 for 2017 add paid P3,000,000 dividends during 2017.

REQUIRED:

1. Journal entries(no compounding of entries)
   


2. Investment income


3. Carrying amount of investment
   
   
   
   1. Under Equity Method
   
   
   2. Under Fair Value