Question
On January 1, 20X7, P acquired 80 percent of S by purchasing 40,000 shares of S's common stock. There was no differential related to this
On January 1, 20X7, P acquired 80 percent of S by purchasing 40,000 shares of S's common stock. There was no differential related to this transaction. The noncontrolling interest had a fair value equal to 20 percent of book value. The book value of S on December 31, 20X7 was as follows:
|
| |||
Common Stock ($10 par value) | $ | 500,000 |
| |
Retained Earnings |
| 350,000 |
| |
Total | $ | 850,000 |
| |
On January 1, 20X8, P purchased an additional 12,500 shares directly from S for $25 per share.
Based on the preceding information, by what amount did the Investment in S account change?
a. Increase of $296,500
b. Increase of $64,000
c.Decrease of $64,000
d.Decrease of $296,500
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