Webb Company Purchased 90% of Jones Company for $990,000 When

Multiple Choice

Webb Company purchased 90% of Jones Company for $990,000 when the book value of Jones was $1,000,000. There was no premium paid by Webb. Jones currently has 100,000 shares outstanding and a book value of $1,200,000.Assume Jones issues 20,000 new shares of its common stock to outside parties for $15 per share.After acquiring the additional shares, what adjustment is needed for Webb's investment in Jones account?

A) $270,000 increase.
B) $270,000 decrease.
C) $30,000 increase.
D) $30,000 decrease.
E) No adjustment is necessary.