If a Subsidiary Re-Acquires Its Outstanding Shares from Outside Ownership

question 40

Multiple Choice

If a subsidiary re-acquires its outstanding shares from outside ownership for more than the noncontrolling interest valuation basis at the date of buying such treasury stock, which of the following statements is true?

• A) Additional paid-in capital on the parent company's books will decrease.
• B) Investment in subsidiary will increase.
• C) Treasury stock on the parent's books will increase.
• D) Treasury stock on the parent's books will decrease.
• E) No adjustment is necessary.

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Definitions:

Psychotherapist

A trained professional who treats mental health problems and emotional difficulties through the use of psychological techniques and verbal communication.

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A sleep disorder where individuals have difficulty falling or staying asleep.

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The tendency to block the free expression of impulses and primitive ideas—a reflection of the defense mechanism of repression.

Psychoanalyst

A professional who practices psychoanalysis, a therapeutic technique originally developed by Sigmund Freud to treat mental disorders by exploring the unconscious mind, dreams, and childhood experiences.