On July 1, 2019, an investor company owns 20% of the common stock of an Investee and can exercise significant Influence over the Investee. On July 1, 2019, Immedlately preceding the sale of 10% of the investee to an unaffiliated party, the balance of the Equity Investment account was $50,000. The Investor company sold the 10% Interest in the Investee for $30,000. The investor company determined that after the sale of 10% it could no longer exert significant Influence and that the remalning 10% investment has a readily determinable fair value. Immediately after the sale of the 10% interest, what is the carrying amount (l.e., balance) of the Equlty Investment and what method of accounting must the Investor use for the Equity Investment? Select one a. Balance - S25,000 Method Equity b. Balance - $25,000 Method - Fair value C. Balance - $ 30,000 : Method- Fair value d. Balance - $ 30,000: Method - Cost-based
On July 1, 2019, an investor company owns 20% of the common stock of an Investee and can exercise significant Influence over the Investee. On July 1, 2019, Immedlately preceding the sale of 10% of the investee to an unaffiliated party, the balance of the Equity Investment account was $50,000. The Investor company sold the 10% Interest in the Investee for $30,000. The investor company determined that after the sale of 10% it could no longer exert significant Influence and that the remalning 10% investment has a readily determinable fair value. Immediately after the sale of the 10% interest, what is the carrying amount (l.e., balance) of the Equlty Investment and what method of accounting must the Investor use for the Equity Investment? Select one a. Balance - S25,000 Method Equity b. Balance - $25,000 Method - Fair value C. Balance - $ 30,000 : Method- Fair value d. Balance - $ 30,000: Method - Cost-based
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:On July 1, 2019, an investor company owns 20% of the common stock of an Investee and can exercise significant influence over the investee. On July 1, 2019, immedlately preceding the
sale of 10% of the investee to an unaffiliated party, the balance of the Equity Investment account was $50,000. The Investor company sold the 106 Interest in the Investee for $30,000. The
Investor company determined that after the sale of 10% it could no longer exert significant influence and that the remalning 106 investment has a readily determinable fair value.
Immediately after the sale of the 10% interest, what is the carrying amount (I.e., balance) of the Equlty Investment and what method of accounting must the Investor use for the Equity
Investment?
Select one:
a, Balance - $25,000 Method - Equity
b. Balance $25,000 Method - Fair value
C. Balance $30,000 Method - Fair value
d. Balance- $ 30,000 Method Cost-based
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