A Subsidiary Issues New Shares of Common Stock

question 99

Multiple Choice

A subsidiary issues new shares of common stock. If the parent acquires all of these shares at an amount greater than book value, which of the following statements is true?

• A) The investment in subsidiary will decrease.
• B) Additional paid-in capital will decrease.
• C) Retained earnings will increase.
• D) The investment in subsidiary will increase.
• E) No adjustment will be necessary.

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Definitions:

Religious Institutions

Organizations based on beliefs and practices related to the sacred or divine, often involving rituals, moral guidance, and communal activities.

Moral Guidance

Advice or direction based on principles of right and wrong, often derived from societal norms, religion, or ethical theories.

Bureaucratic

Pertaining to a system or organization marked by fixed rules, hierarchy, and a detailed division of administrative tasks.

Mainstream Society

The dominant or prevailing cultural and social norms, values, and practices of a society.