Point CoPurchased 90% of Sharpe Corp

question 26

Multiple Choice

Point Co.purchased 90% of Sharpe Corp.'s voting stock on January 1,20X2 for $5,580,000.Prior to the acquisition,Point held a 10% equity position in Sharpe Company.On January 1,20X2 Pointe's 10% investment in Sharpe has a book value of $340,000 and a fair value of $620,000.On January 1,20X2 Point records the following:

• A)Debit Gain on revaluation of Sharpe's stock $280,000
• B)Credit Gain on revaluation of Sharpe's stock $280,000
• C)Credit Investment in Sharpe stock $5,860,000
• D)Debit Investment in Sharpe stock $6,200,000