Under the parent company concept, the issuance of additional common stock by a subsidiary at more than book value results in a gain to the parent that must be reported in the consolidated income statement.

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Under the parent company concept, the issuance of additional common stock by a subsidiary at more than book value results in a gain to the parent that must be reported in the consolidated income statement. This is because the parent company is considered to own a proportionate share of the subsidiary's net assets, and therefore, any increase in the subsidiary's net assets results in an increase in the parent company's net assets.

Under the Parent Company Concept, the Issuance of Additional Common