: At the beginning of 2018, Esterlina Corporation purchased 40% of the ordinary shares outstanding of Mary Grace Incorporated for P15, 000,000 when the netassets

: At the beginning of 2018, Esterlina Corporation purchased 40% of the ordinary shares outstanding of Mary Grace Incorporated for P15, 000,000 when the netassets of Mary Grace Incorporated amounted to P30,000,000. At
the acquisition date, the carrying amounts of the identifiable assets and liabilities of Mary Grace Incorporated were equal to their fair value, except for the following:
a. Equipment whose fair value was P7,000,000 greater than its carrying amount.
b. Inventory whose fair value was P2,500,000 greater than its carrying amount.
The equipment has a remaining life of 4 years, and the inventory was all sold during 2013.
Mary Grace Incorporated has two classes of shares: Ordinary shares (par value, P100), 300,000 shares outstanding, 15% cumulative preference shares (par value, P50), 100,000 shares outstanding.
The investee reported the following net income (inclusive of enter-company transactions) and payment of cash dividend:
Net Income
Dividend payment
The following were the intercompany transactions between the investor and the associates:
In 2018, the Mary Grace Inco.porated sold inventory to Esterlina Corporation for P750,000. The costof the inventory was P500,000. 50% of this inventory was still unsold at the end of 2018, and the remainder were sold
in 2019.
On July 1, 2019, Esterlina Corporation sold equipment for P900,000 to Mary Grace Incorporated. The carrying amount of the equipment is P500,000 at the time of sale. The remaining life of the equipment is five years,
and Mary Grace Incorporated uses the straight-line method of depreciating the equipment.
On January 1, 2020, Esterlina Corporation sold 70,000 shares of Mary Grace Incorporated at P260 per share. The company incurred the broker’s fee of P200,000. The sale resulted in a loss of significant influence of Esterlina
Corporation over the operation of Mary Grace Incorporated. Esterlina designates the investment at fair value through profit or loss on this date.
During 2018, Mary Grace Incorporated earned P25,000,000 net income and a P10,000,000 cash
The following are the market value of Mary Grace Incorporated shares at year-end:
-P 156.00
– P 162.00
– P 163,50
is the carrying value of the investment on December 31, 2018? December 31, 2019? December 31, 2020?

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