The constructive retirement of subsidiary preferred stock through the purchase by the parent is reported as an actual retirement in the consolidated statements.

Question

Quizplus · Accepted Answer

When a parent company purchases subsidiary preferred stock and retires it, this is considered a reduction in the total number of outstanding preferred shares. As a result, the consolidated statements will reflect the retirement of the stock as an actual event.

The Constructive Retirement of Subsidiary Preferred Stock Through the Purchase