Fundamentals of Advanced Accounting 5th Edition by Joe Ben Hoyle,Thomas Schaefer,Timothy Doupnik

Exercise 20

McKinley, Inc., owns 100 percent of Jackson Company's 45,000 voting shares. On June 30, McKinley's internal accounting records show a $192,000 equity method adjusted balance for its investment in Jackson. McKinley sells 15,000 of its Jackson shares on the open market for $80,000 on June 30. How should McKinley record the excess of the sale proceeds over its carrying amount for the shares
A) Reduce goodwill by $64,000.
B) Recognize a gain on sale for $ 16,000.
C) Increase its additional paid-in capital by $16,000.
D) Recognize a revaluation gain on its remaining shares of $48,000.