Bart Company Purchased a 30% Interest in Simpson Corporation on January

question 39

Multiple Choice

Bart Company purchased a 30% interest in Simpson Corporation on January 1,2013,and Bart accounted for its investment in Simpson under the equity method for the next 3 years.On January 1,2016,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 2013),and account for the remaining 15% investment under the cost method.

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Definitions:

Women's Business

Enterprises owned and operated by women, often emphasizing issues of representation, entrepreneurship, and the challenges faced by women in the business world.

Debt Financing

Debt Financing involves raising capital by borrowing funds from individuals, banks, or other financial institutions that will be repaid over time with interest.

Equity Financing

Funds invested in new ventures in exchange for part ownership.

Repay Borrowed

The act of returning money that was borrowed from a person or institution.