Fact Pattern:On December 31, Year 4, Rent Company exchanged 25,000 shares of its $10 par value stock for all of the outstanding shares of Subic Company. The fair value of Rents stock was $40 at the date of acquisition.

The December 31, Year 4, balance sheet items of the Subic Company are presented in the opposite column on both a historical cost and a fair value basis.HistoricalFairCostValueCurrent assets$250,000$300,000Fixed assets350,000500,000Liabilities100,000100,000Common stock, $10 par300,000Retained earnings200,000

Question

Which entry in its separate financial statements records Rents investment in its new subsidiary?

A.

Investment in subsidiary$500,000Common stock$250,000Additional paid-in capital250,000

B.

Investment in subsidiary$1,000,000Common stock$250,000Additional paid-in capital750,000

C.

Investment in subsidiary$500,000Common stock$250,000Additional paid-in capital50,000Retained earnings200,000

D.

Current assets$300,000Fixed assets500,000Goodwill300,000Liabilities$100,000Investment in subsidiary1,000,000