If a partially owned subsidiary issues additional shares of common stock to the public or to the parent company, with minority stockholders waiving their preemptive right, the parent company recognizes a nonoperating gain or loss. What would be the effect on the parent company if:
(1) The subsidiary issued additional shares of common stock to the public, but the minority stockholders exercised their preemptive right to participate pro rata in the stock issuance?
(2) The subsidiary issued additional shares of common stock to the parent company, but the minority stockholders exercised their preemptive right to participate pro rata in the stock issuance?
Explain.

Question

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The Answer of If a partially owned subsidiary issues additional shares of common stock to the public or to the parent company, with minority stockholders waiving their preemptive right, the parent company recognizes a nonoperating gain or loss. What would be the effect on the parent company if:
(1) The subsidiary issued additional shares of common stock to the public, but the minority stockholders exercised their preemptive right to participate pro rata in the stock issuance?
(2) The subsidiary issued additional shares of common stock to the parent company, but the minority stockholders exercised their preemptive right to participate pro rata in the stock issuance?
Explain.

If a Partially Owned Subsidiary Issues Additional Shares of Common