Use the following information to answer the question(s) below.

Great Corporation acquired a 90% interest in SOS Corporation at its $810,000 book value on December 31, 2013. A summary of the stockholders' equity for SOS at the end of 2013 and 2014 is as follows:

$$\begin{array} { l l l }
& \underline { 12 / 31 / 13 } & \underline { 12 / 31 / 14 } \
\text { Capital stock, } \$ 10 \text { par } & \$ 600,000 & \$ 500,000 \
\text { Additional paid-in capital }& 30,000 & 30,000 \
\text { Retained Earnings } & \underline { 270,000 } & \underline { 420,000 } \
\text { Total stockholders' equity }&\underline { \$900,000}&\underline { \$1,050.000}
\end{array}$$
-If SOS sold the additional shares to the general public,Great's Investment in SOS account after the sale would be ________.(Use four decimal places.)
A)$945,000
B)$1,157,100
C)$1,225,000
D)$1,245,000

Question

Use the following information to answer the question(s) below.

Great Corporation acquired a 90% interest in SOS Corporation at its $810,000 book value on December 31, 2013. A summary of the stockholders' equity for SOS at the end of 2013 and 2014 is as follows:

$$\begin{array} { l l l } 
& \underline { 12 / 31 / 13 } & \underline { 12 / 31 / 14 } \
\text { Capital stock, } \$ 10 \text { par }  & \$ 600,000 & \$ 500,000 \
\text { Additional paid-in capital }& 30,000 & 30,000 \
\text { Retained Earnings }  & \underline { 270,000 } & \underline { 420,000 } \
\text { Total stockholders' equity }&\underline { \$900,000}&\underline { \$1,050.000}
\end{array}$$
-If SOS sold the additional shares to the general public,Great's Investment in SOS account after the sale would be ________.(Use four decimal places.)
A)$945,000
B)$1,157,100
C)$1,225,000
D)$1,245,000

Quizplus · Accepted Answer

Great Corporation's investment in SOS would not change due to SOS selling additional shares to the general public. The investment account is affected by the parent's share of the subsidiary's net income, dividends received, and any additional investments or disposals. However, the sale of shares by SOS to the public does not directly affect Great Corporation's existing investment balance. The initial investment was based on acquiring a 90% interest at book value, and any changes in the equity structure of SOS through public share sales do not retroactively alter the cost of the investment already made by Great.

Use the Following Information to Answer the Question(s) Below -If SOS Sold the Additional Shares to the General Public,Great's