Question

On July 1, 2018, Tremen Corporation acquired 40% of the shares of Delany Company. Tremen paid $3,170,000 for the investment, and that amount is exactly equal to 40% of the book value of identifiable net assets on Delany's balance sheet. Delany recognized net income of $1,200,000 for 2018, and paid $180,000 of dividends each quarter to its shareholders. After all closing entries are made, Tremen's Investment in Delany Company account would have a balance of:

Answer 1

solution in Tremer's investment Delany Company - calculation of balance of Amount (in $). Amount (in $) Particulars $3170,000 Amount paid to acquire mvestments addr share in income after dividends : y Net Income $1,200,000 OP (420,000) lexso yearly dividends ( $ 180,000 XU) $ 480,000 Income after dividends $ 96000 share in income aflei dvidends for 6 months ($ 480,000 x 40%.x 6mm) $3266,000 Corporation Balance of muestments of Tremen