If a Subsidiary Reacquires Its Outstanding Shares from Outside Ownership

question 39

Multiple Choice

If a subsidiary reacquires its outstanding shares from outside ownership for more than book value, 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.

---

Definitions:

Absurdism

A philosophy stating that human beings exist in a purposeless, chaotic universe, and that the search for meaning or value is inherently futile.

DP Camps

Displaced Persons (DP) Camps were facilities in Europe for refugees and homeless individuals in the aftermath of World War II.