Husch Ltd Acquired 35% of the Common Shares of Megia Ltd

Multiple Choice

Husch Ltd. acquired 35% of the common shares of Megia Ltd. on June 30, 20X1. Husch uses the equity method to record its investment. On June 30, 20X8, Husch acquired another 40% of Megia's common shares. At June 30, 20X8, how should the original 35% ownership be treated?

A) The original valuation of the 35% is added to the valuation of the 40%.
B) The original 35% investment is deemed to have been disposed of and reacquired at the fair value at June 30, 20X8, and added to the new acquisition.
C) The carrying value of the original 35% at June 30, 20X8, is added to the new acquisition.
D) The original 35% is irrelevant to the new acquisition and should be ignored.