Webb Company owns 90% of Jones Company. The original balances presented for Jones and Webb as of January 1, 2013 are as follows: Assume Jones issues 20,000 new shares of its common stock for $15 per share. Of this total, Webb acquires 18,000 shares to maintain its 90% interest in Jones.
After acquiring the additional shares, what adjustment is needed for Webb's investment in Jones account?
A) $270,000 increase.
B) $270,000 decrease.
C) $27,000 increase.
D) $27,000 decrease.
E) No adjustment is necessary.

Question

Webb Company owns 90% of Jones Company. The original balances presented for Jones and Webb as of January 1, 2013 are as follows:  Assume Jones issues 20,000 new shares of its common stock for $15 per share. Of this total, Webb acquires 18,000 shares to maintain its 90% interest in Jones.
After acquiring the additional shares, what adjustment is needed for Webb's investment in Jones account?
A) $270,000 increase. 
B) $270,000 decrease. 
C) $27,000 increase. 
D) $27,000 decrease. 
E) No adjustment is necessary.

Quizplus · Accepted Answer

Investment in Sub Does Not Change After Add'l Shares Purchased

Webb Company Owns 90% of Jones Company