The Acquisition of Treasury Stock by a Subsidiary from Noncontrolling

question 33

Multiple Choice

The acquisition of treasury stock by a subsidiary from noncontrolling shareholders at a price above book value

• A)decreases the parent's share of subsidiary book value and decreases the parent's ownership percentage.
• B)decreases the parent's share of subsidiary book value and increases the parent's ownership percentage.
• C)increases the parent's share of subsidiary book value and decreases the parent's ownership percentage.
• D)increases the parent's share of subsidiary book value and increases the parent's ownership percentage.

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Definitions:

Common Stock

Common Stock represents shares in a company that entitle holders to a share of the profits in the form of dividends and voting rights in certain company decisions.

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, where the investment is recorded at original cost and adjusted to reflect the investee's changes in net assets.

Dividends

Payments made by a corporation to its shareholder members, typically from profits or retained earnings, and often in the form of cash or stock.

Income

The financial gain earned or received by an entity within a specified timeframe, typically a result of employment, investments, or business operations.