Utah Company Holds 80% of the Stock of a Subsidiary

question 32

Multiple Choice

Utah Company holds 80% of the stock of a subsidiary company.The subsidiary issues 100 additional shares of stock to Utah Company at a price above book value per share.The subsidiary does not issue any additional shares at the same time.How will Utah Company record the purchase?

• A)Utah Company records a gain on sale of stock.
• B)Utah Company increases additional paid-in capital.
• C)Utah Company decreases additional paid-in capital.
• D)Utah Company assigns any excess cost over book value acquired to increase undervalued identifiable assets or goodwill as appropriate.

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Definitions:

Dies Intestate

A legal term describing a situation where a person passes away without having made a valid will, thus leaving their estate to be distributed according to the laws of intestacy.

Legacy

Assets or money passed on to heirs in a will, or a system/software inherited from the past.

Uniform Probate Code

A set of laws intended to simplify the process of transferring assets upon death, and to standardize and modernize probate law across states.