Which of the following is correct? The direct sale of additional shares of stock at book value per share to only the parent company from a subsidiary
A)decreases the parent's interest and decreases the noncontrolling shareholders' interest.
B)decreases the parent's interest and increases the noncontrolling shareholders' interest.
C)increases the parent's interest and increases the noncontrolling shareholders' interest.
D)increases the parent's interest and decreases the noncontrolling shareholders' interest.

Question

Quizplus · Accepted Answer

When additional shares of stock are directly sold from a subsidiary to the parent company, the parent's ownership interest in the subsidiary increases, as they are acquiring more shares. At the same time, noncontrolling shareholders' interest in the subsidiary decreases, as the parent is taking a larger share of the subsidiary's ownership. Therefore, the correct answer is D, which states that the direct sale of shares at book value per share to only the parent company from its subsidiary increases the parent's interest and decreases the noncontrolling shareholders' interest.

Which of the Following Is Correct? the Direct Sale of Additional