On January 1, 2014, Daley Corporation purchased 30% of the ordinary shares outstanding of King Corporation for $500,000. During 2014, King Corporation reported net income of $200,000 and paid cash dividends of $100,000. The balance of the Share Investments-King account on the books of Daley Corporation at December 31, 2014 is

Question

Quizplus · Accepted Answer

Daley Corporation's investment in King Corporation should be adjusted for its share of King's net income and dividends. The initial investment is $500,000. Daley's share of King's net income is 30% of $200,000, which is $60,000. Daley's share of the dividends is 30% of $100,000, which is $30,000. The balance is $500,000 + $60,000 - $30,000 = $530,000.

On January 1, 2014, Daley Corporation Purchased 30% of the Ordinary