ADVANCED FINANCIAL ACCOUNTING IA
ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Chapter 9, Problem 9.11Q
To determine

Introduction: The treasury stock method treats purchases of a parent’s stock by a subsidiary in the same way as if the parent had repurchased its own stock and are held in the treasury. Normally, the cost method is used by the subsidiary to account for its investment in the parents as these investments are normally are small and almost never have an influence on parents. Income assigned to non-controlling interest in the subsidiary is calculated after deducting dividend income from investment in a parent from subsidiary income.

To explain: The recognition of parent company shares held by subsidiary in consolidated balance sheet when the treasury stock method is used.

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