On January 1, 2018, Kale Corporation (KC) purchased 32% of the outstanding voting shares of BoJangles Inc. (BJI) for $800,000 cash. On this date, the net assets of BJI totaled $2,450,000, which was represented by common shares of $450,000 and retained earnings of $2,000,000. At acquisition, the fair values of all the identifiable assets and liabilities of BJI were equal to their carrying values. It was determined that KC could exercise influence over the affairs of BJI; therefore, BJI was considered an associate. BJI had a total of $462,500 in net income and declared dividends totaling $37,500 during the period of January 2, 2018, to December 31, 2020. Dividends were the only intercompany transaction during 2018 to 2020. All years have been correctly recorded. Below are the statements of income for both companies for the year ending December 31, 2021. Note that the statements of KC were prepared prior to recording any investment income from BJI for the period ending December 31, 2021 (dividends declared by BJI are not reflected in the statements).

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Kale Corporation Income Statement Revenues 1000000 Expenses 800000 ... View the full answer