Discuss how coffee should account for its investment

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Question - Coffee Corp. purchased 40% of the outstanding shares of Cream Corp. for $2,000,000. The investment allows Coffee to exert significant influence over the operations of Cream. During 2011 Cream recognized net income of $1,500,000 and paid $400,000 in dividends. Discuss how coffee should account for its investment in Cream and how the information would appear in Coffee's balance sheet, income statement, and cash flow statement.

Reference no: EM132075230

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