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, Point’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:
Debit Gain on revaluation of Sharpe’s stock $280,000
Credit Gain on revaluation of Sharpe’s stock $280,000
Credit Investment in Sharpe stock $5,860,000
Debit Investment in Sharpe stock $6,200,000
please show steps in solving
Fair Value of 10% InvestmentValue of Total Company $620,000$6,200,000 Investment made by Company:InitialNewTotal $340,000$5,580,000$5,920,000 Net Gain $280,000 Answer is BDebit to…
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