Parr Company Owned 24,000 of the 30,000 Outstanding Common Shares

question 4

Multiple Choice

Parr Company owned 24,000 of the 30,000 outstanding common shares of Solomon Company on January 1, 2016. Parr's shares were purchased at book value when the fair values of Solomon's assets and liabilities were equal to their book values. The stockholders' equity of Solomon Company on January 1, 2016, consisted of the following: Solomon Company sold 7,500 additional shares of common stock for $90 per share on January 2, 2016. If all 7,500 shares were sold to noncontrolling stockholders, the workpaper adjustment needed each time a workpaper is prepared should increase (decrease) the Investment in Solomon Company by:

• A) ($140,625).
• B) $140,625.
• C) ($112,500).
• D) $192,000.

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Definitions:

Executive Function

Higher-level cognitive processes that enable an individual to plan, organize, strategize, remember details, and manage time and space efficiently.

Higher-Level Cognitive Processes

Refers to complex mental functions such as reasoning, problem-solving, and planning.

Supervising

The act of overseeing and directing the performance of tasks or activities, typically carried out by a person in a position of authority.

Conservation

In the context of developmental psychology, it refers to a child's ability to recognize that quantity remains the same despite changes in its shape or form.