Prescott Corp

Prescott Corp.owned 90% of Bell Inc. ,while Bell owned 10% of the outstanding common shares of Prescott.No goodwill or other allocations were recognized in connection with either of these acquisitions.Prescott reported operating income of $266,000 for 2009 whereas Bell earned $98,000 during the same period.No investment income was included within either of these income totals.How would the 10% investment in Prescott owned by Bell be presented on the consolidated balance sheet?

A) The 10% investment would be eliminated and the amount would not be shown on the consolidated balance sheet.
B) The 10% investment would be reclassified on Bell's balance sheet as Treasury Stock before the consolidation process begins.
C) The 10% investment would appear as treasury stock on the consolidated balance sheet.
D) The 10% investment would be included as part of Additional Paid-In Capital because it is less than 20% and therefore indicates no significant influence is present.
E) Prescott would treat the shares owned by Bell as if they had been repurchased on the open market,and a treasury stock account would be set up recording the shares at their market value on the date of combination.