If A company owns 40% of B company. The information for two companies is as follows:

A Company: Shares owned of B 40,000 Book value of investment in B. $320,000

B Company: Shares outstanding Book value of equity 100,000

Book value per share $800,000

Book value per share $8

Assume that B Company issues 50,000 additional shares solely to other investors (none to A Company) for $10 per share. How does company A account for the issuance of shares by Company B?

(a). Investment-equity of B 26,667

Additional paid-in capital. 26,667

(b). Investment-equity of B 200,000

Additional paid-in capital. 200,000

(c). Investment-equity of B 40,000

Additional paid-in capital. 40,000

(d) Investment-equity of B 40,000

Retained earnings 40,000