Advanced Accounting 12th Edition by Joe Ben Hoyle,Thomas Schaefer , Timothy Doupnik

Exercise 36

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.