Advanced Accounting 12th Edition by Joe Ben Hoyle,Thomas Schaefer , Timothy Doupnik

Exercise 13

On January 1, Stanton Company buys 10 percent of the outstanding shares of its parent, ProMart, Inc. Although the total book and fair values of ProMart's net assets equaled $4 million, the price paid for these shares was $420,000. During the year, ProMart reported $510,000 of operating income (no subsidiary income was included) and paid dividends of $140,000. How are the shares of the parent owned by the subsidiary reported at December 31
A) An investment balance of $457,000 is eliminated for consolidation purposes.
B) Consolidated stockholders' equity is reduced by $457,000.
C) An investment balance of $437,000 is eliminated for consolidation purposes.
D) Consolidated stockholders' equity is reduced by $420,000.