Ryan Company owns 80% of Chase Company. The original balances presented for Ryan and Chase as of January 1, 2013, are as follows: Assume Chase issues 30,000 additional shares common stock solely to Ryan for $12 per share.
After acquiring the additional shares, what adjustment is needed for Ryan's investment in Chase account?
A) $70,000 increase.
B) $70,000 decrease.
C) $15,000 increase.
D) $15,000 decrease.
E) No adjustment is necessary.

Question

Ryan Company owns 80% of Chase Company. The original balances presented for Ryan and Chase as of January 1, 2013, are as follows:  Assume Chase issues 30,000 additional shares common stock solely to Ryan for $12 per share.
After acquiring the additional shares, what adjustment is needed for Ryan's investment in Chase account?
A) $70,000 increase. 
B) $70,000 decrease. 
C) $15,000 increase. 
D) $15,000 decrease. 
E) No adjustment is necessary.

Quizplus · Accepted Answer

$760,000 × 87.5 = $665,000 - ($320,000 + $360,000) = $15,000 Decrease in Investment Account

Ryan Company Owns 80% of Chase Company