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On January 1, 2017, Moza Corporation acquired 25 percent of the outstanding shares of Shama...

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Accounting

On January 1, 2017, Moza Corporation acquired 25 percent of the outstanding shares of Shama Corporation for $100,000 cash. Shama Company reported net income of $75,000 and paid dividends of $30,000 for both 2017 and 2018. The fair value of shares held by Moza was $110,000 and $105,000 on December 31, 2017 and 20X8 respectively.

a) If Moza could not exercise significant influence over the investee, by what amount will Moza's 2018 income increase due to its investment in Shama?

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