Change in parent’s ownership: the parent company can change ownership ratio by purchasing or selling shares of the subsidiary in transaction with unaffiliated companies. a subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchase shares from unaffiliated parties. When parent sells a subsidiary share to non-affiliate a gain or loss normally occurs and is recorded on the seller’s books when a company disposes of all or part of an investment. ASC 323 deals explicitly with sales of stock of investee, requiring recognition of a gain or loss on the difference between the selling price and the carrying amount of the stock.
To explain : how are parent sales of common stock of its subsidiaries to non-affiliates for more than their carrying value are reported, how the sales reported in consolidated financial statements should.
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Chapter 9 Solutions
ADVANCED FIN. ACCT. LL W/ACCESS>CUSTOM<
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