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31 March, 09:03

Beta Corporation acquired 100 percent of the voting shares of Yang Inc. by issuing 10,000 new shares of $10 par value common stock with a $40 market value. a. How is define a subsidiary corporation?

b. How is define a parent corporation?

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  1. 31 March, 10:19
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    The question is not complete.

    Here is the complete question:

    Beta Corporation acquired 100 percent of the voting shares of Yang Inc. by issuing 10,000 new shares of $10 par value common stock with a $40 market value.

    Required:

    1) Which company is the parent and which is the subsidiary?

    2) Define a subsidiary corporation.

    3) Define a parent corporation.

    4) Which entity prepares consolidated worksheet?

    5) Why are elimination entries used?

    Here are the answers:

    1. Beta Corporation is the parent while Yang Inc. is the subsidiary.

    2. A subsidiary corporation is an investee company in which another entity has a controlling interest in. This controlling interest is majorly achieved when the entity has more than 50% f the total voting shares.

    3. A parent corporation is the investment entity which has a controlling interest in another entity called subsidiary.

    4. It is the parent corporation that prepares consolidated worksheet.

    5. Elimination entries are used to avoid double recording of values of assets, liabilities and equity in the consolidated accounts.

    Explanation:

    Parent and subsidiary is a form of relationship that exists where one entity has a controlling investment in another.
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