hange from significant influence to passive influence, readily determinable market value
On July 1, 2022, an investor company owns 30% of the common stock of an investee and can exercise significant influence over the investee. On July 1, 2022, immediately before the sale of 10% of the investee to an unaffiliated party, the balance of the Equity Investment account was $48,000. The investor company sold the 10% interest in the investee for $30,000. The investor company determined that after the sale of 10% it could no longer exert significant influence and that the remaining 20% investment has a readily determinable fair value. Immediately after the sale of the 10% interest, what is the carrying amount (i.e., balance) of the Equity Investment (after all required adjustments) and what method of accounting must the investor use for the Equity Investment?
Select one:
a.
BalanceMethod$60,000Fair value
b.
BalanceMethod$32,000Fair value
c.
BalanceMethod$60,000Cost-based
d.
BalanceMethod$32,000Equity