On January 1, 2020, Entity A acquired 90% of outstanding ordinary shares of Entity B at a price of P900,000. Entity A paid P20,000 costs related to the acquisition of shares.

At the acquisition date, the net assets of Entity B were reported at P950,000. All the assets of Entity B are properly valued except for machinery, which is undervalued by P150,000. The machinery has a remaining useful life of 5 years.

For the year ended December 31, 2020, Entity B reported a net income of P200,000 and declared dividends in the amount of P30,000.

The fair value of Investment in Entity B on December 31, 2020, is P1,000,000, while the cost of disposal is 5%.

Entity A voluntarily prepared its separate financial statements.

If Entity A elects cost method to account its Investment in Entity B in its separate financial statements, what is the carrying amount of the Investment in Entity B on December 31, 2020?

The following accounts are as they appear on the separate company financial statements of a parent and its 100%-owned subsidiary (created in 20×1) at the end of 20×6:
Parent Subsidiary
Equity in net income (of subsidiary) P 7,000
Investment in subsidiary 280,000
Common stock 100,000 P 25,000
Additional paid-in capital 900,000 175,000
Retained earnings 390,000 80,000
Dividends declared (550,000) (3,000)
What would be the parent’s Investment in Subsidiary balance at 12/31/x6 if it used the cost method of accounting?