Jade Investments purchased 40% of the common stock of Ivory Corporation on March 1, 2014. Ivory Corporation reports a net income of $675,000 for the 2015 year. Based on the information provided, which of the following is true of the balance sheet on December 31, 2015?

Question

Quizplus · Accepted Answer

As Jade Investments owns 40% of the common stock of Ivory Corporation, they will be entitled to 40% of the net income reported by Ivory Corporation. Therefore, Jade Investments' equity in Ivory Corporation will increase, causing total equity on the balance sheet to also increase. The other options are not affected by the information given.

Jade Investments Purchased 40% of the Common Stock of Ivory