West, Inc. holds 100 percent of the common stock of Coast Company, an investment acquired for $680,000. Immediately following the combination, West's net assets have a book value of $1,150,000 and a fair value of $1,390,000. The book value and the fair value of Coast's net assets on the date of combination are $400,000 and $550,000, respectively. Immediately following the combination, a consolidated balance sheet is prepared.
-Based on the information given above,at what amount will West's investment in Coast stock be reported in the consolidated balance sheet?
A) $0
B) $400,000
C) $440,000
D) $480,000

Question

Quizplus · Accepted Answer

In a consolidated balance sheet, the investment in the subsidiary is eliminated, and the assets and liabilities of the subsidiary are combined with those of the parent. Therefore, the investment in Coast stock will be reported at $0.

West, Inc Holds 100 Percent of the Common Stock of Coast