From the viewpoint of a consolidated entity,the parent's purchase of the outstanding subsidiary preferred stock results in the retirement of the stock purchased.

Question

Quizplus · Accepted Answer

When a parent company purchases the outstanding preferred stock of its subsidiary, it results in the retirement of that stock. This is because the subsidiary is now wholly owned by the parent and there is no longer a need for the stock to be outstanding.

From the Viewpoint of a Consolidated Entity,the Parent's Purchase of the Outstanding