When a Parent Purchases a Portion of the Newly Issued

question 40

Multiple Choice

When a parent purchases a portion of the newly issued stock of its subsidiary and the parent's percentage of ownership interest remains the same,

• A)​any difference between the change in equity and the price paid is the excess of cost or book value attributable to the new block.
• B)​any difference between the change in equity and the price paid is viewed as a gain or loss on the sale of an interest.
• C)​any difference between the change in equity and the price paid is viewed as a change in paid-in capital or retained earnings.
• D)​there will be no adjustment to parent's paid-in capital

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Definitions:

Core Countries

Nations, usually industrialized, that dominate the global economic system through wealth, diverse production, and strong government institutions.

World Systems Theory

A macro-sociological perspective that analyzes societies in terms of the global economic system, dividing the world into core, periphery, and semi-periphery zones.

Peripheral Countries

Nations that are less developed than the semi-periphery and core countries, often exploited for their resources by more economically dominant nations.

World Poverty

A global issue characterized by the lack of basic resources, services, and opportunities necessary for people to live a healthy and productive life, disproportionately affecting developing countries.