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:

Resting Membrane Potential

The electrical charge difference across the cell membrane when the cell is in a non-excited state.

Local Potential

A temporary, localized change in resting potential, usually occurring in neurons, that can lead to an action potential if it reaches threshold.

Electrically Excitable Cells

Cells that can change their membrane potential in response to a stimulus, leading to generation and propagation of action potentials.

Depolarization

A reduction in the difference in electrical charge across a cell's plasma membrane, which is a crucial step in the conduction of impulses along nerve cells.