A subsidiary's issuance of additional common stock to outsiders results in:

Question

Quizplus · Accepted Answer

When a subsidiary issues additional common stock to outsiders and the net proceeds per share exceed the per-share carrying amount of the parent's Investment in Subsidiary Common Stock ledger account prior to the issuance, it results in a gain to the parent company. This is because the value of the parent's investment increases due to the higher market valuation implied by the new share issuance price.

A Subsidiary's Issuance of Additional Common Stock to Outsiders Results