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 all 7,500 shares were sold to noncontrolling stockholders, the workpaper adjustment needed each time a workpaper is prepared should increase (decrease) the Investment in Solomon Company by:
A) ($140,625).
B) $140,625.
C) ($112,500).
D) $192,000.

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 all 7,500 shares were sold to noncontrolling stockholders, the workpaper adjustment needed each time a workpaper is prepared should increase (decrease) the Investment in Solomon Company by:
A) ($140,625). 
B) $140,625. 
C) ($112,500). 
D) $192,000.

Quizplus · Accepted Answer

The Answer is D

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