A Parent Company Owns a Controlling Interest in a Subsidiary

question 33

Multiple Choice

A parent company owns a controlling interest in a subsidiary whose stock has a book value of $27 per share. The last day of the year, the subsidiary issues new shares entirely to outside parties at $25 per share. The parent still holds control over the subsidiary. Which of the following statements is true?

• A) Since the sale was made at the end of the year, the parent's investment account is not affected.
• B) Since the shares were sold for less than book value, the parent's investment account must be increased.
• C) Since the shares were sold for less than book value, the parent's investment account must be decreased.
• D) Since the shares were sold for less than book value but the parent did not buy any of the shares, the parent's investment account is not affected.
• E) None of the above.

Evaluate the importance of proper etiquette in email communications and the impact of digital communication on relationships.

Acknowledge and respect the process of relationship development and the role of mutual interests and intellectual connections.

Understand and apply the legal and ethical obligations for creating a harassment-free workplace.

Recognize and respect individual differences and viewpoints in personal and professional contexts.

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Definitions:

Confidence Interval

An interval of values, sourced from statistical sampling, that is likely to maintain the value of a covert population parameter.

Population Variance

The variance calculated from the entire population of data points, providing a measure of how much the data points in the population differ from the mean.

Alternative Hypothesis

The hypothesis that proposes a difference or relationship exists among groups or variables, opposite to the null hypothesis.

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is actually true, used as a measure of the threshold of statistical significance.