Wren Inc., a public company, owns 20% of Dong Ltd.'s common shares for strategic purposes. The investment's

Question:

Wren Inc., a public company, owns 20% of Dong Ltd.'s common shares for strategic purposes. The investment's carrying value at January 1, 2017, is $300,000. During the year, Dong reported profit of $250,000 and paid a dividend of $20,000. The investment's fair value on December 31, 2017, Wren's year end, is $315,000.

(a) Assuming Wren has significant influence over Dong, indicate the amount reported on the balance sheet for the investment at December 31 and the amount of investment income reported in the income statement.

(b) Assume instead that Wren is a private company and reports the investment using cost. Indicate the amount reported on the balance sheet for the investment at December 31 and the amount of investment income reported in the income statement.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...