Homework Answers
Amount paid to acquire 30% = $1,400,000
Net income in 2017 and 2018
= 600,000 + 750,000
= $1,350,000
Dividend paid
= 200,000 + 200,000
= $400,000
Net income to be distributed
= 1,350,000 - 400,000
= $950,000
Share of Fred in Larry = 30%
= 950,000*30%
= $285,000
Therefore total amount of investment to be reported by Fred
= 1,400,000 + 285,000
= $1,685,000
Therefore the correct option is 3rd.
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