_____ On 5/1/05, Pax Inc. created Sax Inc., investing $500,000 cash. Sax reported a highly unexpected $230,000 loss for 2005 and a $40,000 profit for 2006. The 2005 loss created substantial doubt as to (a) the ability of the subsidiary to survive and (b) the ability of the parent to sell the subsidiary at other than an amount substantially below its initial investment. What should the carrying value of Pax's investment in Sax be at 12/31/06 under each of the following methods?

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The Answer of _____ On 5/1/05, Pax Inc. created Sax Inc., investing $500,000 cash. Sax reported a highly unexpected $230,000 loss for 2005 and a $40,000 profit for 2006. The 2005 loss created substantial doubt as to (a) the ability of the subsidiary to survive and (b) the ability of the parent to sell the subsidiary at other than an amount substantially below its initial investment. What should the carrying value of Pax's investment in Sax be at 12/31/06 under each of the following methods?

_____ on 5/1/05, Pax Inc