Which of the following is true concerning the treasury stock approach in account
ID: 2463658 • Letter: W
Question
Which of the following is true concerning the treasury stock approach in accounting for a subsidiary's investment in parent company stock?
A.
The original cost of the subsidiary's investment reduces long-term liabilities.
B.
The cost of parent shares is treated as if the shares are no longer outstanding.
C.
The subsidiary must apply the equity method in accounting for the investment if the treasury stock approach is used.
D.
The treasury stock approach increases total stockholders' equity.
E.
The cost of parent shares is treated as if the shares are no longer issued.
A.
The original cost of the subsidiary's investment reduces long-term liabilities.
Explanation / Answer
B.
The cost of parent shares is treated as if the shares are no longer outstanding.
B.
The cost of parent shares is treated as if the shares are no longer outstanding.
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