Problem

McKinley, Inc., owns 100 percent of Jackson Company’s 45,000 voting shares. On June 30, Mc...

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.

Step-by-Step Solution

Request Professional Solution

Request Solution!

We need at least 10 more requests to produce the solution.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the solution will be notified once they are available.
Add your Solution
Textbook Solutions and Answers Search