Subsidiary Company S had the following stockholders’ equity on December 31, 2017, prior to distributing a 10% stock dividend: The fair value of the shares distributed is $50 each. What is the effect of this dividend on the subsidiary equity, the investment account, and the December 31, 2017, elimination procedures? Assume the parent uses the simple equity method to account for its investment in the subsidiary.
Subsidiary Company S had the following stockholders’ equity on December 31, 2017, prior to distributing a 10% stock dividend: The fair value of the shares distributed is $50 each. What is the effect of this dividend on the subsidiary equity, the investment account, and the December 31, 2017, elimination procedures? Assume the parent uses the simple equity method to account for its investment in the subsidiary.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Subsidiary Company S had the following
The fair value of the shares distributed is $50 each. What is the effect of this dividend on the subsidiary equity, the investment account, and the December 31, 2017, elimination procedures? Assume the parent uses the simple equity method to account for its investment in the subsidiary.
Transcribed Image Text:Common stock ($1 par), 100,000 shares issued and outstanding.
Paid-in capital in excess of par
Retained earnings .
$ 100,000
1,900,000
2,000,000
Total equity
$4,000,000
.....
......
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