Horizons inc. has agreed to sell an investment in a subsidiary that has been accounted for on the eq

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Horizons inc. has agreed to sell an investment in a subsidiary that has been accounted for on the equity method of accounting to a minority stockholder in exchanges for the stockholder’s share in Herizons. Since the fair value of the investment exceeds the book value, Herizons CEO is considering recognizing a gain on the exchange. However, the new CFO at accounted as a credit to equity. Horizons turns to you for advice.