When a parent purchases a portion of the newly issued stock of its subsidiary and the ownership interest increases,
A)any difference between the change in equity and the price paid is the excess of cost or book value attributable to the new block.
B)any difference between the change in equity and the price paid is viewed as a gain or loss on the sale of an interest.
C)any difference between the change in equity and the price paid is viewed as a change in paid-in capital or retained earnings.
D)there will be no adjustment.

Question

When a parent purchases a portion of the newly issued stock of its subsidiary and the ownership interest increases,
A)​any difference between the change in equity and the price paid is the excess of cost or book value attributable to the new block.
B)​any difference between the change in equity and the price paid is viewed as a gain or loss on the sale of an interest.
C)​any difference between the change in equity and the price paid is viewed as a change in paid-in capital or retained earnings.
D)​there will be no adjustment.

Quizplus · Accepted Answer

When a parent company increases its ownership in a subsidiary by purchasing newly issued stock, any difference between the change in equity and the price paid is typically accounted for as a change in paid-in capital or retained earnings, reflecting the additional investment in the subsidiary.

When a Parent Purchases a Portion of the Newly Issued