Coffee Corp.purchased 45% of the outstanding shares of Cream Corp.for $1,845,000.The investment allows Coffee to exert significant influence over the operations of Cream.During 2011 Cream recognized net income of $2,500,000 and paid $650,000 in dividends.Discuss how Coffee should account for its investment in Cream and how the information would appear in Coffee's balance sheet,income statement,and cash flow statement.

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The Answer of Coffee Corp.purchased 45% of the outstanding shares of Cream Corp.for $1,845,000.The investment allows Coffee to exert significant influence over the operations of Cream.During 2011 Cream recognized net income of $2,500,000 and paid $650,000 in dividends.Discuss how Coffee should account for its investment in Cream and how the information would appear in Coffee's balance sheet,income statement,and cash flow statement.