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:

Probability

Estimating the chances of an occurrence happening.

Classical Method

A traditional approach in statistical hypothesis testing where conclusions are drawn based on probability calculations and assumptions.

Probability

A notation of the chances an event will transpire, marked on a scale from 0 to 1.

Independent Events

Multiple events where the happening of one does not influence the likelihood of the other events happening.