Use the Following Information to Answer Bellow Questions:
on January

Multiple Choice

Use the following information to answer bellow Questions:
On January 1, 2018, Pearson Company acquired all of Sundisk Company's voting stock for $20,000 in cash. Sundisk's total shareholders' equity at January 1, 2018 was $5,000. Some of Sundisk's assets and liabilities at the date of acquisition had fair values that were different from reported values, as follows:
$\begin{array}{lrr}&\text { Book Value}&\text { Fair Value }\\\text { Plant assets, net (10 years, straight-line) } & \$ 15,000 & \$ 10,000 \\\text { Identifiable intangibles (indefinite life) } & 0 & 9,000\end{array}$
It is now December 31, 2020 (3 years later) . Impairment of recognized identifiable intangibles totals $400 for 2018 and 2019, and there is no impairment in 2020. There is no goodwill impairment as of the beginning of 2020, but goodwill impairment for 2020 is $1,200. Pearson uses the complete equity method to account for its investment. December 31, 2020 trial balances for Pearson and Sundisk follow:
$\begin{array}{|l|r|r|}\hline&\text { Pearson } & \text { Sund isk } \\&\operatorname{Dr}(\mathrm{Cr}) & \operatorname{Dr}(\mathrm{Cr}) \\\hline \text { Current assets } & \$ 5,000 & \$ 2,500 \\\hline \text { Plant assets, net } & 28,700 & 22,000 \\\hline \text { Identifiable intangibles } & - & - \\\hline \text { Investment in Sundisk } & 28,400 & - \\\hline \text { Goodwill } & - & - \\\hline\text { Liabilities } & \{20,300\} & \{11,000\} \\\hline \text { Capital stock } & \{15,000\} & \{2,000\} \\\hline \text { Retained earnings, beginning } & \{25,000\} & \{10,000\} \\\hline \text { Sales revenue } & \{25,000\} & \{14,000\} \\\hline \text { Equity in net income of Sundisk } & \{800\} & -\\\hline \text { Cost of goods sold } & 20,000 & 9,000 \\\hline \text { Operating expenses } & 4,000 & 3,500 \\\hline&\$0&\$0\\\hline\end{array}$ The following questions relate to consolidation eliminating entries for 2020.
-Now assume Pearson uses the cost method to account for its investment in Sundisk. You are doing consolidation eliminating entries at December 31, 2020. Before doing eliminating entries (C) , (E) , (R) , (O) , in eliminating entry (A) you must increase Pearson's Investment in Sundisk by:

A) $7,000
B) $5,600
C) $7,600
D) $8,000