Refer to the facts in problem 4).If Pacer Company uses the lower of cost or market method of accounting for its investment in Queen Company,and the value of its investment hasn't changed,its Investment in Queen Company account on December 31,2017,should be

Question

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Since Pacer Company uses the lower of cost or market method of accounting for its investment in Queen Company, the value of its investment will be reported as the lower of its cost or its market value. As given in problem 4), the market value of the investment on December 31, 2017, was $80,000, which is lower than its cost of $100,000. Therefore, the Investment in Queen Company account on December 31, 2017, should be reported at $80,000. Hence, the correct choice is (C).

Refer to the Facts in Problem 4)