Subsidiary Company S had the following stockholders’ equity on December 31, 2017, prior to distributing a 10% stock dividend:

The fair value of the shares distributed is $50 each. What is the effect of this dividend on the subsidiary equity, the investment account, and the December 31, 2017, elimination procedures? Assume the parent uses the simple equity method to account for its investment in the subsidiary.

 

Transcribed Image Text:

Common stock ($1 par), 100,000 shares issued and outstanding. Paid-in capital in excess of par Retained earnings . $ 100,000 1,900,000 2,000,000 Total equity $4,000,000 ..... ...... Common stock ($1 par), 100,000 shares issued and outstanding. Paid-in capital in excess of par Retained earnings . $ 100,000 1,900,000 2,000,000 Total equity $4,000,000 ..... ......

Answer rating: 100% (QA)

Consolidated Financial Statement The consolidated financial statement is the statement prepared by t... View the full answer