If a subsidiary re-acquires its outstanding shares from outside ownership for more than the noncontrolling interest valuation basis at the date of buying such treasury stock, which of the following statements is true?
A) Additional paid-in capital on the parent company's books will decrease.
B) Investment in subsidiary will increase.
C) Treasury stock on the parent's books will increase.
D) Treasury stock on the parent's books will decrease.
E) No adjustment is necessary.

Question

Quizplus · Accepted Answer

When a subsidiary re-acquires its shares for more than the noncontrolling interest valuation, the excess paid reduces the additional paid-in capital on the parent company's books.

If a Subsidiary Re-Acquires Its Outstanding Shares from Outside Ownership