If a Subsidiary Issues New Shares of Its Stock to Noncontrolling

question 21

Multiple Choice

If a subsidiary issues new shares of its stock to noncontrolling stockholders, the book value of the parent's interest in the subsidiary may:

• A) increase.
• B) decrease.
• C) remain the same.
• D) increase, decrease, or remain the same.

Understand and calculate earnings per share (EPS).

Understand treasury stock, including reasons for a company to hold it.

Compute and interpret book value per share and its relevance in financial analysis.

Calculate dividend yield and understand its significance.

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Definitions:

Activity Variance

The discrepancy observed between a business's estimated activities costs or resources and the actual expenses or usage.

Net Operating Income

Represents the total profit of a business after operating expenses are subtracted from gross profit.

Personnel Expenses

Costs associated with the compensation and benefits of a company's employees, including wages, salaries, bonuses, and benefits.

Planning Budget

A budget created for a specific level of activity that is used for planning and coordinating operations.