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Pepper Company purchases 2 5 percent of Salt Company in 2 0 2 2 . On January 1 , 2 0 2 3 , Pepper

Pepper Company purchases 25 percent of Salt Company in 2022. On January 1,2023, Pepper Company purchases an additional 40 percent of Salt Company. How does Pepper Company account for its original 25 percent ownership investment in Salt on January 1,2023? The original investment is revalued to fair value, and Pepper records the difference between its old book value and fair value as a revaluation gain or loss. The original investment is revalued to book value, and Pepper records the difference between its old fair value and its new book value as a revaluation gain or loss. The original investment continues to be accounted for under the equity method for financial reporting purposes. The original investment should be accounted for under the fair value method for external financial reporting purposes. None of the above.Next No

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