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On July 1, 2018, Tremen Corporation acquired 30% of the shares of Delany Company. Tremen paid...

On July 1, 2018, Tremen Corporation acquired 30% of the shares of Delany Company. Tremen paid $3,200,000 for the investment, and that amount is exactly equal to 30% of the book value of identifiable net assets on Delany's balance sheet. Delany recognized net income of $1,500,000 for 2018, and paid $190,000 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:

Multiple Choice

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$3,311,000.

$3,593,000.

$3,425,000.

$3,680,000.

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business   accounting   
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Answer #1

Calculate balance

Initial investment 3200000
Net income (1500000*30%) 450000
Dividend (190000*30%) -57000
Investment in Delany Company 3593000

So answer is b) $3593000

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