Concept Introduction:
A company issues stock in two basis forms, common stock and
To indicate:The treatment of subsidiary’s preferred stock in consolidation.
Explanation of Solution
While consolidating the parent company accounts with the accounts of its subsidiaries, the effects of intercompany transactions are required to be adjusted to get the consolidated balance.
The preferred stock hold by the subsidiary company is treated same as the other long term liabilities of the company. The preferred stock is added in the consolidated
Want to see more full solutions like this?
Chapter 9 Solutions
ADV.FIN.ACCT. CONNECT+PROCTORIO PLUS
- Which of the following items is not presented under the equity section of the statement of financial position? Share options outstanding Share warrants outstanding Share appreciation rights payable Share dividend payable/distributablearrow_forwardHow would a share split affect the amount of total share capital, total shareholder's equity and retained earnings, respectively?arrow_forwardHow are rights, warrants, and options of subsidiary companies treated in the computation of consolidated EPS?arrow_forward
- The costs of legal, promotional, and accounting services necessary to effect the sale of shares are referred to as share issue costs. How are these costs recorded? Compare this approach to the way debt issue costs are recorded.arrow_forwardWhat other techniques can be applied to compute the intrinsic value of shares of the company?arrow_forwardQuestion: How do you account for non-controlling interests in consolidated financial statements using the equity method?arrow_forward
- Discuss the significance and the effects of issuing a Share Certificate by company.arrow_forwardWhich of the following does not affect accumulated profits? A. Stock dividendB. Share splitC. Conversion of preference share to ordinary shareD. Treasury share transactionarrow_forwardHow does declaring a stock dividend affect the corporation’s assets, liabilities, and total equity? What are the effects of the eventual distribution of that stock?arrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning