Mohan owned all of Beatty Inc. Although the Investment in Beatty Inc. account had a balance of $862,000, the subsidiary's 12,000 shares had an underlying book value of only $55 per share. On January 1, 2021, Beatty issued 4,000 new shares to the public for $75 per share. How does this transaction affect the Investment in Beatty Inc. account?
A) It should be decreased by $225,000.
B) It should be increased by $225,000.
C) It should be increased by $9,500.
D) It should be decreased by $9,500.
E) It is not affected since the shares were sold to outside parties.
Correct Answer:
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