Answered: In the consolidated balance sheet,…

Business

Accounting

In the consolidated balance sheet, Company P's outstanding common stock may be shown as

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

17. Company P had 300,000 shares of common stock outstanding. It owned 80% of the outstanding common stock of S. S owned 20,000 shares of P common stock. In the consolidated balance sheet, Company P's outstanding common stock may be shown as

a. 300,000 shares, footnoted to indicate that S holds 20,000 shares.

b. 300,000 shares

c. 300,000 shares, less 20,000 shares of treasury stock.

d. 285,000 shares

Definition Definition Stock repurchased from the stockholders by the company that once issued it. The repurchase of the stock reduces the stockholder's equity balance on the balance sheet. Treasury stocks are an important constituent of stockholder's equity but do not carry any voting rights.

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