MC Qu. 88 LO 12-05, 12-06 On July 1, 2013, Tremen Corporation acquired... On Jul
ID: 2500871 • Letter: M
Question
MC Qu. 88 LO 12-05, 12-06 On July 1, 2013, Tremen Corporation acquired...
On July 1, 2013, Tremen Corporation acquired 35% of the shares of Delany Company. Tremen paid $3,140,000 for the investment, and that amount is exactly equal to 35% of the fair value of identifiable net assets on Delany's balance sheet. Delany recognized net income of $1,500,000 for 2013, and paid $330,000 dividends to its shareholders. Assume net income and dividends accrue evenly throughout the year. After all closing entries are made, Tremen's "Investment in Delany Company" account would have a balance of:
$3,402,500.
$3,344,750.
$3,549,500.
$3,689,500.
On July 1, 2013, Tremen Corporation acquired 35% of the shares of Delany Company. Tremen paid $3,140,000 for the investment, and that amount is exactly equal to 35% of the fair value of identifiable net assets on Delany's balance sheet. Delany recognized net income of $1,500,000 for 2013, and paid $330,000 dividends to its shareholders. Assume net income and dividends accrue evenly throughout the year. After all closing entries are made, Tremen's "Investment in Delany Company" account would have a balance of:
Explanation / Answer
Net Income 409500 1170000*35% 1500000-330000 Investment 3140000 Total 3549500 The correct answer is C. $ 3549500
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