On July 1, 2019, an investor company owns 20% of the common stock of an investee and can exercise significant influence over the investee. On July 1, 2019, immediately preceding the sale of 10% of the investee to an unaffiliated party, the balance of the Equity Investment account was $50,000. The investor company sold the 10% interest in the investee for $30,000. The investor company determined that after the sale of 10% it could no longer exert significant influence and that the remaining 10% investment has a readily determinable fair value. Immediately after the sale of the 10% interest, what is the carrying amount (i.e., balance) of the Equity Investment and what method of accounting must the investor use for the Equity Investment?

a. Balance - $30,000 : Method - Fair value
b. Balance - $25,000 : Method - Equity
c. Balance - $25,000 : Method - Fair value
d. Balance - $30,000 : Method - Cost-based

Answer rating: 100% (QA)

c Balance25000 MethodFair value Explanation For 20 Equity invest... View the full answer