Question
I am having trouble on this one. I am not sure if it is D or or B. Any help will be appreciated. Thank you.
I am having trouble on this one. I am not sure if it is D or or B. Any help will be appreciated. Thank you.
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, immediately 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 remaining 10% 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 Equity Investment and what method of accounting must the investor use for the Equity Investment? a.25,000-equity b.25,000-fair value c.30,000-cost-based d. 30,000-fair value
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