Jade Investments Inc.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

Since Jade Investments Inc. purchased 40% of the common stock of Ivory Corporation, it means they have a significant influence on the company's operations. As such, they will be able to record their share of Ivory Corporation's net income in their own financial statements. Thus, Jade Investments Inc.'s equity will increase, and this will reflect on the balance sheet. Therefore, option C - Total equity will increase - is the correct answer.