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11. On January 1, Year 2, Mega Corp. acquired 10% of the outstanding voting stock of Penny, Inc. On January 2, Year 3, Mega gained
11. On January 1, Year 2, Mega Corp. acquired 10% of the outstanding voting stock of Penny, Inc. On January 2, Year 3, Mega gained the ability to exercise significant influence over financial and operating control of Penny by acquiring an additional 20% of Penny's outstanding stock. The two purchases were made at prices proportionate to the value assigned to Penny's net assets, which equaled their carrying amounts. For the years ended December 31, Year 2 and Year 3, Penny reported the following: Dividends paid Net income Year 2 $200,000 600,000 Year 3 $300,000 650,000 In Year 3, what amounts should Mega report as current year investment income and as an adjustment, before income taxes, to Year 2 investment income
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