Answer:
The tremen's investment in Delany company is $3,162,500
Explanation:
Tremen's investment in Delany Company account would be as follows at year ended 31st December 2021
Initial investment value $3,090,000
Delany's net income $1,300,000
Dividends paid(4*$180,000) ($720,000)
Profits after dividends $580,000
Tremen's share 25%*$580,000*6/12 $72,500
year end balance of Tremen's investment $3,162,500
First of all, the total dividends is taken away from net income and a portion of the net income after dividend payment is added to Tremen's investment which reflects its percentage shareholding and the duration of investment of six months
