Jax Company Used the Acquisition Method When It Acquired Its

question 15

Multiple Choice

Jax Company used the acquisition method when it acquired its investment in Saxton Company. Jax now sells some of its shares of Saxton such that neither control nor significant influence exists. Which of the following statements is true?

• A) The difference between selling price and acquisition value is recorded as a realized gain or loss.
• B) The difference between selling price and acquisition value is recorded as an unrealized gain or loss.
• C) The difference between selling price and carrying value is recorded as a realized gain or loss.
• D) The difference between selling price and carrying value is recorded as an unrealized gain or loss.
• E) The difference between selling price and carrying value is recorded as an adjustment to retained earnings.

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Definitions:

Signature Card

A document signed by an account holder at a financial institution that provides a specimen signature for the purpose of verifying future transactions.

ABA Code

A nine-digit identification number assigned to banks in the United States by the American Bankers Association, used for routing checks and electronic payments.

Federal Reserve District

One of the twelve regions established by the Federal Reserve Act, each with a Federal Reserve Bank, to regulate and oversee banking operations in the United States.

Routing Number

A unique nine-digit code used to identify a banking institution in the United States, essential for processing electronic transfers and checks.