On January 1 2017 Lark Corporation purchased 35% of the common stock outstanding of Dinc Corporation for $700000. During 2017 Dinc Corporation reported net income of $200000 and paid cash dividends of $100000. The balance of the Stock Investments-Run account on the books of Lark Corporation at December 31 2017 is

Question

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Lark Corporation's investment in Dinc Corporation would be accounted for using the equity method, given the 35% ownership stake. Under the equity method, the investment account is increased by Lark's share of Dinc's net income and decreased by any dividends received. Lark's share of Dinc's net income is 35% of $200,000, which is $70,000. The dividends received would be 35% of $100,000, which is $35,000. Therefore, the investment account would be initially recorded at $700,000, increased by $70,000, and then reduced by $35,000 for the dividends, resulting in a balance of $735,000.

On January 1 2017 Lark Corporation Purchased 35% of the Common