Additional stock issued by subsidiary under different assumptions
The stockholders’ equities of Pod Corporation and its 80 percent-owned subsidiary, Sod Corporation, on December 31, 2011, appear as follows (in thousands):
Pod Sod
Common stock, $10 par $5,000 $2,200
Retained earnings 2,000 1,000
Total $7,000 $3,200
Pod’s Investment in Sod account on this date is equal to its underlying book value. On January 1, 2012, Sod issues 30,000 previously unissued common shares for $20 per share.
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