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Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng
Edition 11ISBN: 978-0538480284Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng
Edition 11ISBN: 978-0538480284 Exercise 6
Subsidiary Company S had the following stockholders' equity on December 31, 2013, prior to distributing a 10% stock dividend:
Common stock ($1 par), 100,000 shares issued and outstanding....... $ 100,000
Paid-in capital in excess of par.................................. 1,900,000
Retained earnings............................................ 2,000,000
Total equity............................................... $4,000,000
The fair value of the shares distributed is $50 each. What is the effect of this dividend on the subsidiary equity, the investment account, and the December 31, 2013, elimination procedures? Assume the parent uses the simple equity method to account for its investment in the subsidiary.
Common stock ($1 par), 100,000 shares issued and outstanding....... $ 100,000
Paid-in capital in excess of par.................................. 1,900,000
Retained earnings............................................ 2,000,000
Total equity............................................... $4,000,000
The fair value of the shares distributed is $50 each. What is the effect of this dividend on the subsidiary equity, the investment account, and the December 31, 2013, elimination procedures? Assume the parent uses the simple equity method to account for its investment in the subsidiary.
Explanation
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It is given that the 100,000 shares is i...
Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng
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