_____ When a parent that has a 90%-owned subsidiary sells 10% of its holdings at less than the book value per share amount, which of the following will usually occur or result?
A) The noncontrolling interest will decrease.
B) The carrying value of the investment will remain unchanged.
C) The carrying value of the investment will increase.
D) The parent will report a gain or loss that will not be eliminated in consolidation.
E) None of the above.

Question

Quizplus · Accepted Answer

When a parent sells a portion of its holdings in a subsidiary at less than the book value per share, it will recognize a loss (if the selling price is less than the carrying amount) or a gain (if the selling price is more than the carrying amount) on its individual financial statements. This gain or loss is not eliminated in consolidation because it reflects a real economic event that has occurred between the parent and an external party.

_____ When a Parent That Has a 90%-Owned Subsidiary Sells