Answered: A subsidiary issues new shares of…

A subsidiary issues new shares of common stock. If the parent acquires all of these shares at an amount greater than book value, which of the following statements is true? Multiple Choice

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 3C

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Additional paid-in capital will decrease.
The investment in subsidiary will decrease.
No adjustment will be necessary.
The investment in subsidiary will increase.
Retained earnings will increase.
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Multiple Choice
A subsidiary issues new shares of common stock. If the parent acquires all of these shares at an amount greater than book value, which of the
following statements is true?
Additional paid-in capital will decrease.
The investment in subsidiary will decrease.
No adjustment will be necessary.
The investment in subsidiary will increase.
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