Ames owns 100% of Nestlum, Inc. Although the Investment in Nestlum account has a balance of $596,000, the subsidiary's 12,000 shares have an underlying book value of only $40 per share. On Jan 1, 2009, Nestlum issues 3,000 new shares to the public for $50 per share. How does this transaction affect the Investment in Nestlum account?
Showing posts with label Variable Interest Entities. Show all posts
Showing posts with label Variable Interest Entities. Show all posts
Tuesday, February 1, 2011
Variable interest entities - stock transaction: Ames, Inc. and Nestlum, Inc.
Ames owns 100% of Nestlum, Inc. Although the Investment in Nestlum account has a balance of $596,000, the subsidiary's 12,000 shares have an underlying book value of only $40 per share. On Jan 1, 2009, Nestlum issues 3,000 new shares to the public for $50 per share. How does this transaction affect the Investment in Nestlum account?
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