Question
Mount Rainier Company owns 100% of the 60,000 outstanding shares of Mount Washington Company. Mount Rainier accounts for the investment in Mount Washington using the
Mount Rainier Company owns 100% of the 60,000 outstanding shares of Mount Washington Company. Mount Rainier accounts for the investment in Mount Washington using the equity method, and it has current balance of $750,000 in the Investment in Mount Washington account. Mount Washington issues 20,000 new shares to the public for $25 per share. How does this transaction affect the Investment in Mount Washington account that appears on Mount Rainier financial records?
An increase to $1,250,000 | ||
An increase to 937,500 | ||
A decrease to $250,000 | ||
A decrease to $500,000 | ||
No change |
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