On January 1, 2011, Daley Corporation purchased $30 \%$ of the ordinary shares outstanding of King Corporation for $\$ 600,000$. During 2011, 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 31,2011 is

Question

Quizplus · Accepted Answer

Daley Corporation should recognize its share of King Corporation's net income and dividends. The share of net income is $30\% \times \$200,000 = \$60,000$. The share of dividends is $30\% \times \$100,000 = \$30,000$. The investment account increases by the share of net income and decreases by the share of dividends: $\$600,000 + \$60,000 - \$30,000 = \$630,000$.

On January 1, 2011, Daley Corporation Purchased 30%30 \%30% Of the Ordinary Shares Outstanding of King Corporation For

On January 1, 2011, Daley Corporation Purchased $30 \%$ Of the Ordinary Shares Outstanding of King Corporation For