Question

On July 1, 2021. Tremen Corporation acquired 40% of the shares of Delany Company. Tremen paid...

On July 1, 2021. Tremen Corporation acquired 40% of the shares of Delany Company. Tremen paid $3,000,000 for the investmentand 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 1,000,000 for 2021, and paid $150,000 of dividends each quarter to its shareholders. After all closing entries are made for the year ended December 31, 2021. Tremen's in Delany Company" account would have a balance of

Homework Answers

Answer #1

Solution:

Tremen's in Delany Company" account would have a balance of $ 3,080,000

Explanation:

Cost of Investment in Delany Company $        3,000,000
Add: Net Income $ 1,000,000
Less: Dividends $   (600,000)
Income After Dividends $     400,000
Share of income after dividends for 6 Months $              80,000
[$400,000*40%*6/12]
Balance in Investment Account $        3,080,000
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