Chapter 9, Problem 9.3C

To determine

Sale of subsidiary common shares: When a parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needed to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in the subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders’ equity attributable to the controlling interest, through an adjustment to additional paid-in capital.

A memo to present alternative ways to record the difference between the carrying value and sales price of the share that are sold and recommend preferred reporting alternative.