Use the Following Information to Answer the Question(s)below

question 17

Multiple Choice

Use the following information to answer the question(s) below.
On January 1,2011,Pansy Company acquired a 10% interest in Sunflower Corporation for $80,000 when Sunflower's stockholders' equity consisted of $400,000 capital stock and $100,000 retained earnings.Book values of Sunflower's net assets equaled their fair values on this date.Sunflower's net income and dividends for 2011 through 2013 were as follows:

-Bart Company purchased a 30% interest in Simpson Corporation on January 1,2008,and Bart accounted for its investment in Simpson under the equity method for the next 3 years.On January 1,2011,Bart sold one-half of its interest in Simpson after which it could no longer exercise significant influence over Simpson.Bart should

• A)continue to account for its remaining investment in Simpson under the equity method for the sake of consistency.
• B)adjust the investment in Simpson account to one-half of its original amount and account for the remaining 15% interest using the equity method.
• C)account for the remaining investment under the cost method,using the investment in Simpson account balance immediately after the sale as the new cost basis.
• D)adjust the investment account to one-half of its original amount (one-half of the purchase price in 2008),and account for the remaining 15% investment under the cost method.

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