What was the gain or loss from this transaction for Pearl

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Question - Pearl Corporation paid $150,000 on January 1, 2013 for a 25% interest in Sandlin Inc. On January 1, 2013, the book value of Sandlin's stockholders' equity consisted of $200,000 of common stock and $200,000 of retained earnings. All the excess purchase cost over book value acquired was attributable to a patent with an estimated life of 5 years. During 2013 and 2014, Sandlin paid $3,000 of dividends each quarter and reported net income of $60,000 for 2013 and $80,000 for 2014. Pearl used the equity method.

If Pearl sold a 10% interest in Sandlin Inc. for $100,000 on January 1, 2015 and gave up influence on Sandlin Inc., what was the gain or loss from this transaction for Pearl?

A) $36,400

B) $63,600

C) $100,000

D) $500,000

Reference no: EM132676350

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