Question

Tesco Company owns 90% of Blondel Company. The original balances presented for Blondel and Tesco as of January 1, 2013, are as follows:

Blondel Company:

Shares outstanding $50,000

Book value of Blondel $600,000

Book value per share $6

Tesco Company:

Shares owned of Blondel $45,000

Book value of investment $540,000

Blondel sells 10,000 shares of previously unissued shares of its common stock to outside parties for $5 per share.

What adjustment is needed for Tesco’s investment in Blondel account?



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