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.

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Definitions:

Performance

The execution or accomplishment of work, acts, feats, or functions as specified in a contract or agreement.

Repudiation

The rejection or denial of a duty, obligation, or contract.

Anticipatory Breach

An expressed or implied declaration by one party to a contract that they do not intend to fulfill their future obligations under the contract.

Express Breach

A clear and definitive violation of a contract's terms, explicitly stated within the agreement.