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Assume that Brown Company owns 100% of Schroeder Corporation. Schroeder reports Stockholders’ Equity of $500,000. The...

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Accounting

Assume that Brown Company owns 100% of Schroeder Corporation.Schroeder reports Stockholders’ Equity of $500,000. The Equityinvestment was acquired at book value (i.e., no AAP). Schroedersells a 10% interest to outsiders for $115,000. The entry made byBrown as a result of the sale of stock by Schroeder includes:

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Difference between the book value and sales proceeds is adjusted to the brown company's owner's equity because control is maintained after the sale transaction.
Schroeder reports Stockholders’ Equity of $500,000 $        500,000
Multiply: Sale of interest 10.00%
Book value of share of investment $          50,000
10% investment sold at value of $        115,000
Less: Book value of share of investment $        (50,000)
Less: 10% Non controlling share in value of sold $        (11,500)
Adjustment to the parent's owners' equity (APIC) $          53,500
Adjustment to the parent's owners' equity (APIC) credited to $          53,500

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