
Concept explainers
a. Calculate change in book value of parent equity as a result of repurchase
Subsidiary’s purchase of shares from non-affiliate:some time subsidiary purchases treasury shares form non-controlling shareholders. The parent company may prefer not to be concerned with outside shareholders and may direct the subsidiary to reacquire any non-controlling shares that become available.
Although the parent may not participate directly when subsidiary purchases
Requirement 1
Computation of change in the book value of parent’s equity as a result of repurchase of shares by Q Manufacturing.
b. Journal entry to recognize the change in equity book value
Subsidiary’s purchase of shares from non-affiliate: some time subsidiary purchases treasury shares form non-controlling shareholders. The parent company may prefer not to be concerned with outside shareholders and may direct the subsidiary to reacquire any non-controlling shares that become available.
Although the parent may not participate directly when subsidiary purchases treasury stock, the parent’s equity in the net assets of the subsidiary may change as a result of the transaction. The change must be recognized in preparing the consolidated statements.
Requirement 2
The entry to be recorded by B advertising to recognize the change in book value of the shares held.
c. Consolidation entries
Subsidiary’s purchase of shares from non-affiliate: some time subsidiary purchases treasury shares form non-controlling shareholders. The parent company may prefer not to be concerned with outside shareholders and may direct the subsidiary to reacquire any non-controlling shares that become available.
Although the parent may not participate directly when subsidiary purchases treasury stock, the parent’s equity in the net assets of the subsidiary may change as a result of the transaction. The change must be recognized in preparing the consolidated statements.
Requirement 3
The preparation of consolidation entries immediately following the purchase of shares by Q

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Chapter 9 Solutions
Advanced Financial Accounting
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