Sale of shares subsidiary’s to non-affiliate:when subsidiary sells shares to a party outside the economic entity, it increases total
The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.
Computation of change in the book value of shares held by P as a result of S issuance of additional shares.
Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity, it increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. The sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.
The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.
The entry to be recorded by P advertising to recognize the change in book value of the shares held.
a. Consolidation entries
Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity, it increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. The sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.
The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.
The preparation of consolidation entries immediately following the issuance of additional shares

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Chapter 9 Solutions
ADVANCED FIN. ACCT.(LL)-W/CONNECT
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- Solve thisarrow_forwardThe stock of UCD has just been sold in an initial public offering at a price of $165 per share. One week after this offering, the stock has risen to $195. You believe the stock will rise to $225 over the coming year. You expect UCD to pay a $15 dividend during the coming year. If you require a rate of return of 30%, do you believe this is a good investment at the current price of $195? a. Yes, the holding period return is 33.33% greater than 30%. b. No, the holding period return is 25.64% less than 30%. c. No, the holding period return is 23.08% less than 30%. d. No, the holding period return is 15.38% less than 30%.arrow_forwardCompute the amount of raw materialsarrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
