Shoreline Corporation had 53,000,000 of $10 par value common stock outstanding on January 1, 2012, and...
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Shoreline Corporation had 53,000,000 of $10 par value common stock outstanding on January 1, 2012, and retained eamings of $1,000,000 on the same date. During 2012, 2013, and 2014, Shoreline eamed net incomes of $400,000, $700,000, and $300,000, respectively, and paid dividends ol $300,000, $550,000, and $100,000, respectively. On January 1, 2012, Pebble purchased 21% of Shoreline's outstanding common stock for $1,240,000. On January 1, 2013, Pebble purchased 9% of Shoreline's outstanding stock for $510,000, and on January 1, 2014, 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 2012, 2013, and 2014? 2. What will be the December 31, 2014 balance in the Investment in Shoreline account after all adjustments have been made? Shoreline Corporation had 53,000,000 of $10 par value common stock outstanding on January 1, 2012, and retained eamings of $1,000,000 on the same date. During 2012, 2013, and 2014, Shoreline eamed net incomes of $400,000, $700,000, and $300,000, respectively, and paid dividends ol $300,000, $550,000, and $100,000, respectively. On January 1, 2012, Pebble purchased 21% of Shoreline's outstanding common stock for $1,240,000. On January 1, 2013, Pebble purchased 9% of Shoreline's outstanding stock for $510,000, and on January 1, 2014, 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 2012, 2013, and 2014? 2. What will be the December 31, 2014 balance in the Investment in Shoreline account after all adjustments have been made?
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