Shoreline Corporation had $3,000,000 of $10 par value common stock outstanding on January 1,2009,and retained earnings of $1,000,000 on the same date.During 2009,2010,and 2011,Shoreline earned net incomes of $400,000,$700,000,and $300,000,respectively,and paid dividends of $300,000,$550,000,and $100,000,respectively.
On January 1,2009,Pebble purchased 21% of Shoreline's outstanding common stock for $1,240,000.On January 1,2010,Pebble purchased 9% of Shoreline's outstanding stock for $510,000,and on January 1,2011,Pebble purchased another 5% of Shoreline's outstanding stock for $320,000.All payments made by Pebble that are in excess of the appropriate book values were attributed to equipment,with each block depreciable over 20 years under the straight-line method.
Required:
1.What is the adjustment to Investment Income for depreciation expense for Pebble's investment in Shoreline in 2009,2010,and 2011?
2.What will be the December 31,2011 balance in the Investment in Shoreline account after all adjustments have been made?
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