Problem

Aaron owns 100 percent of the 12,000 shares of Veritable, Inc. The Investment in Veritable...

Aaron owns 100 percent of the 12,000 shares of Veritable, Inc. The Investment in Veritable account has a balance of $588,000, corresponding to the subsidiary’s unamortized acquisition-date fair value of $49 per share. Veritable issues 3,000 new shares to the public for $50 per share. How does this transaction affect the Investment in Veritable account?

a.It is not affected because the shares were sold to outside parties.

b.It should be increased by $2,400.

c.It should be increased by $3,000.

d.It should be decreased by $117,600.

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