Parr Company owned 24,000 of the 30,000 outstanding common shares of Solomon Company on January 1, 2016. Parr's shares were purchased at book value when the fair values of Solomon's assets and liabilities were equal to their book values. The stockholders' equity of Solomon Company on January 1, 2016, consisted of the following: Solomon Company sold 7,500 additional shares of common stock for $90 per share on January 2, 2016. If Parr Company purchased all 7,500 shares, the book entry to record the purchase should increase the Investment in Solomon Company account by:
A) $562,500.
B) $590,625.
C) $675,000.
D) $150,000.

Question

Parr Company owned 24,000 of the 30,000 outstanding common shares of Solomon Company on January 1, 2016. Parr's shares were purchased at book value when the fair values of Solomon's assets and liabilities were equal to their book values. The stockholders' equity of Solomon Company on January 1, 2016, consisted of the following:  Solomon Company sold 7,500 additional shares of common stock for $90 per share on January 2, 2016. If Parr Company purchased all 7,500 shares, the book entry to record the purchase should increase the Investment in Solomon Company account by:
A) $562,500. 
B) $590,625. 
C) $675,000. 
D) $150,000.

Quizplus · Accepted Answer

The Answer of Parr Company owned 24,000 of the 30,000 outstanding common shares of Solomon Company on January 1, 2016. Parr's shares were purchased at book value when the fair values of Solomon's assets and liabilities were equal to their book values. The stockholders' equity of Solomon Company on January 1, 2016, consisted of the following:  Solomon Company sold 7,500 additional shares of common stock for $90 per share on January 2, 2016. If Parr Company purchased all 7,500 shares, the book entry to record the purchase should increase the Investment in Solomon Company account by:
A) $562,500. 
B) $590,625. 
C) $675,000. 
D) $150,000.

Parr Company Owned 24,000 of the 30,000 Outstanding Common Shares