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Question 8 (1 point) Saved On January 1, X1, Parent Company established a new entity, Subsidiary Corporation. Subsidiary issued common shares to Parent in return
Question 8 (1 point) Saved On January 1, X1, Parent Company established a new entity, Subsidiary Corporation. Subsidiary issued common shares to Parent in return for $50,000 cash paid by Parent. Summarized statements of financial position of the companies on December 31, X3, are presented below. Parent Subsidiary $25,000 Assets Cash Investment Other assets Total assets $25,000 50,000 350,000 $425,000 125,000 $150,000 Liabilities and equity Current liabilities $125,000 $35,000 Share capital 200,000 50,000 Retained earnings 100,000 65,000 Total liabilities and equity $425,000 $150,000 During X3, Parent purchased inventory for $30,000 and sold the full amount to Subsidiary for $50,000. Prior to the end of the year, all the transferred units have been resold by Subsidiary to external parties for $75,000. Determine the balance in Subsidiary Company's investment account on December 31, X3, assuming that Parent accounted for its investment in Subsidiary using the Equity Method (instead of the cost)
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