Which of the following statements is incorrect regarding a parent's purchase of additional subsidiary shares?
A)There can never be an income statement gain or loss.
B)Due to the constraints of conservatism, there can never be an income statement gain but a loss should be recognized if so indicated.
C)If the price paid to reacquire the shares exceeds their book value, the debit first is used to reduce existing paid-in capital in excess of par from retirement and the balance is a debit to Retained Earnings.
D)If the price paid to reacquire the shares is less than their book value, there is a credit to paid-in capital in excess of par from retirement.

Question

Which of the following statements is incorrect regarding a parent's purchase of additional subsidiary shares?
A)There can never be an income statement gain or loss.
B)​Due to the constraints of conservatism, there can never be an income statement gain but a loss should be recognized if so indicated.
C)​If the price paid to reacquire the shares exceeds their book value, the debit first is used to reduce existing paid-in capital in excess of par from retirement and the balance is a debit to Retained Earnings.
D)​If the price paid to reacquire the shares is less than their book value, there is a credit to paid-in capital in excess of par from retirement.

Quizplus · Accepted Answer

The Answer is B

Which of the Following Statements Is Incorrect Regarding a Parent's