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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: True or False: If Company Accumulates Common Stock in Company B such that it acquires a 51% stake…

A: Consolidated financial statements - Consolidated financial statements will contain the financials of…

Q: Company Y purchases a controlling interest in Company Z on January 1, 2019. Which of the following…

A: Ans. C Company Y's Shareholders' Equity as well as Company Y's proportional share ofCompany Z's net…

Q: In consolidated balance sheet immediately after the acquisition, consolidated stockholders' equity…

A: The term “acquisitions” means when a company holds more than 50% of controlling interest in another…

Q: Which of the following would be termed a secondary transaction? General Electric Co issues…

A: Secondary Transactions are those transactions where an investor of a company sells its interest in…

Q: A parent acquires the outstanding bonds of a subsidiary company directly from an outside third…

A: Describe whether the gain should be allocated to the parent or the subsidiary: The gain of $45,000…

Q: 7. A corp seeks to acquire T corp. A transfers 500,000 shares of voting stock and 100,000 shares of…

A: The primary focus of the inquiry pertains to the tax implications of corporate acquisitions,…

Q: Q1) When a company owns 50% or more of another company, accounting standards require that the owner…

A: SOLUTION- In general, the consolidation of financial statements requires a company to integrate and…

Q: In a "type C" sotck for assets acquisition the purchasing corporation acquires substantially all of…

A: Type C reorganization involves a purchasing corporation acquiring most of a target's assets using…

Q: Majan SAOG purchased 25% shares of Teejan SAOG. Majan SAOG also intends to influence and control the…

A: In case of the acquisition of shares of another company, the consolidated financial statements are…

Q: b) The new shares which are issued in a rights issue are offered to the existing shareholders at…

A: Right Shares are those shares which are issued to the existing shareholder of the company instead of…

Q: There will be a share premium in case the corporation declares a large share dividends O True O…

A: Share dividends means when shares of the company are distributed as dividends to the ordinary and…

Q: A subsidiary has (1) a convertible preferred stock and (2) a convertible bond. How are these items…

A: Earnings per share (EPS)represent the amount of income earned per share of outstanding common stock…

Q: Assume that P acquires controlling interest in S and there is a Differential at the acquisition…

A: Step 1 Consolidated Financial Statements is Full Consolidation and all the shareholding attributes…

Q: The pre-emptive right of common shareholders is defined as the right to. to receive cash dividends…

A: Common stockholders are a group of stockholders who have voting rights and have the voting rights…

Q: "IFRS 10 Consolidated Financial Statements states that there are few ways to ascertain if the…

A: Consolidated financial statements are prepared to report the financial information of two or more…

Q: which of the following are similarities between spin-off and carve-out I.both firms have the same…

A: Carve out is the process of separating a subsidiary, business unit or line from the patent. It is…

Q: Which of the following is a correct statement pertaining to consolidation of a subsidiary with…

A: Cumulative preference shares are a type of preferred shares where shareholders have the right to…

Q: Company P owns 90% of Company S’s shares. Assume Company S then purchases 2% of Company P’s…

A: Consolidated financial statement: It is combined financial statement report of holding and…

Q: Which of the following statements would best describe the numerator of the diluted earnings per…

A: In accounting diluted earnings per share (EPS) shows the impact of convertible securities (such as…

Q: Company A owns 40 percent of Company B and exercisessignificant influence over the management of…

A: Introduction: Business combination: Business combination refers to the process of aggregating the…

Q: The par value of ordinary share represents The liquidation value of the share •The book value of the…

A: As posted multiple independent questions we are answering only first question kindly repost the…

Q: Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium…

A: The objective of the question is to calculate the total equity value of the combined firm XY after…

Q: Hippo Co. is a holding company. It holds all the shares of Opco. Shareholder H holds all the shares…

A: According to the tax rules, a capital gain is calculated by deducting cost of the asset from its net…

Q: Under U.S. GAAP, ________ preferred shares are classified as a liability. Group of answer choices…

A: The question is asking which type of preferred shares are classified as a liability under U.S.…

Q: hat the paren

A: A consolidated financial statement is inclusive of all the subsidiary companies where the owner has…

Q: Which one of the following is correct to calculate the percentage shareholding of the parent? 1.…

A: Parent and subsidiary company is a relationship between two companies in which one company has…

Q: f Kamfer Limited owned 52% of the outstanding ordinary shares of Maenetja Limited, which reporting…

A: Cost method is used only when the investor has no control over the invested entity it is recorded…

Q: Statement 1: Upon issue of share rights, the issuing corporation records the transaction by…

A: The term "preference shares" refers to shares of a company's stock that have dividends that are paid…

Q: 16. underwriting commitment is when the underwriter agrees to buy the entire issue and assume full…

A: A Full Purchase underwriting commitment is a firm agreement in which the underwriter pledges to buy…

Q: TRUE OR FALSE. 1. Under the shareholders' equity section of a consolidated statement of Financial…

A: Consolidation in accounting refers to the process of combining the financial statements of a parent…

Q: State two effects of Forfeiture of shares.

A: Forfeiture of shares: Forfeiture of share means terminating the shares of the stockholder for…

Q: A controlling financial interest traditionally has been defined as the investor corporation's…

A: Controlling interest refers to the interest in the company that gives the power to control the…

Q: Non-controlling interest (NCI) is the ownership interest of those shareholders who hold shares in a…

A: Non-Controllable Interest is also known as Minority Interest, which indicate the share of stake…

Q: Assume X Corp creates a subsidiary, Y Corp, and invests $500,000 cash in exchange for all of the $1…

A: Given that X Corp has created a subsidiary and has invested $500,000 cash in exchange for the common…

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.
Σ
< Prev
31
18 of 20
HE
Next >

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.
M
Saved
< Prev
18 of 20
Next >
Help Save & Exit
A
Sep 16

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction:

VIEW

Step 2: Explanations:-

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Why it is called that if a company acquires more than 50% of the voting stock of another company, it’s said to have control?
How should preferred stock of a subsidiary be shown in a consolidated balance sheet in each case? a. If it is held 100 percent by the parent. b. If it is held 50 percent by the parent and 50 percent by outside interests c. If it is held 100 percent by outside interests.
1. Company S and Company T combine to form a new Company ST by pooling all their assets and liabilities and issuing new ST shares to all shareholders in proportion to their previous shareholdings. How this transaction should be categorised? a) Merger b) Acquisition c) Spin-off d) De-merger
1. The par value of ordinary share represents •The liquidation value of the share •The book value of the share •The legal nominal value assigned to the share •The amount received by the entity when the share was originally issued 2. An advantage of a corporation is •ease of formation •limited liability •regulation •double taxation
Explain what effect does the dividend have on the retained earnings and non-controlling interest balances in the parent company’s consolidated balance sheet if a 70 percent owned subsidiary company declares and pays a cash dividend.
_______ preferred shares contain a provision requiring that preferred shareholders share ratably in distributions with common shareholders. Group of answer choices Participating Convertible Cumulative Redeemable
Issued shares are the Number of shares that have been distributed to shareholders Total number of shares that can be issued by the corporation at any time Number of shares that are owned by shareholders at the balance sheet date Number of shares the corporation has repurchased Non-cash assets invested into a partnership are recorded at * Zero Their original cost O Their carrying value Their fair market value
03) Which of the following journal entry formats is appropriate under the equity method of accounting to record the parent company's share of a subsidiary's dividend declaration? Select one: 1 O b. ll Oc. III Od. IV 1. Intercompany Dividends Receivables Investment in Subsidiary Common Stock Cash Intercompany Dividend Revenue Intercompany Dividends Receivable intercompany Dividends Revenue Investment on Subsidiary Common Stock Intercompany Dividend Revenue
1.Identify which of these statements regarding real estate limited partnerships (RELPs) and real estate investment trusts (REITs) is CORRECT. One-REITs are generally liquid and actively traded on national and regional stock exchanges, as well as over the counter. Two-A REIT shareholder may sell as few or as many shares as he or she deems appropriate, whereas a RELP investor must generally sell the entire interest.