Question

McKinley, Inc., owns 100 percent of Jackson Company’s 45,000 voting shares. On June 30, McKinley’s internal accounting records show a $192,000 equity method adjusted balance for its investment in Jackson. McKinley sells 15,000 of its Jackson shares on the open market for $80,000 on June 30. How should McKinley record the excess of the sale proceeds over its carrying amount for the shares?

Answer 1

Increase its additional paid-in capital by $16,000.

Step-by-step explanation:

$80,000 less $64,000 (1/3 * $192,000)

= $16,000