When a Parent Purchases a Portion of the Newly Issued

question 41

Multiple Choice

When a parent purchases a portion of the newly issued stock of its subsidiary in a private offering and the ownership interest decreases,

• A)​any difference between the change in equity and the price paid is the excess of cost or book value attributable to the new block.
• B)​any difference between the change in equity and the price paid is viewed as a gain or loss on the sale of an interest.
• C)​any difference between the change in equity and the price paid is viewed as a change in paid-in capital or retained earnings.
• D)​there will be no adjustment.

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Definitions:

Sampling Distribution

The likelihood distribution associated with a particular statistic derived from a random sample.

Simple Random Samples

Samples drawn in such a way that every member of the population has an equal chance of being selected, ensuring that the sample represents the population well.

Proportion

A statistic that measures the fraction of the total number of items in a set that are of a particular category or characteristic.

Poisson Distribution

A probability distribution that describes the occurrence of rare events or the number of events in fixed intervals of time or space.