Darby Inc. purchased 30% of the outstanding common shares of LME Company for $ 840,000. On March 31, LME's year end, the company reported net income of $ 540,000. The appropriate adjustment to the investment account would be

Question

Quizplus · Accepted Answer

Darby Inc. owns 30% of LME Company, so it should recognize 30% of LME's net income as an increase in the investment account. 30% of $540,000 is $162,000.

Darby Inc Purchased 30% of the Outstanding Common Shares of LME