Capitalism 2 and Capitalism Lab Forum

A couple questions as this is not making sense to me.

1. When creating a subsidiary, then going to the stock exchange to see the returns of each of your stocks, why does the newly created company show a gain in the amount of the initial capital that was given to the company? For example, if you create a subsidiary and give it capital of $50M to start with, the market value will be $50M under the stock section and it will also show a gain of $50M. However, shouldn’t the gain be $0?

2. Another related question to #1 above. When you go to the income statement for the parent company, the stock return section of the income statement will show a $50M gain in this section and a corresponding gain in the net income section. However, the parent company has done nothing to earn any income, all they did was set up a subsidiary company. It seems like this line should also be $0 on the income statement. It should only impact the balance sheet.

Both issues will be fixed in the next version 6.9.00.

Hi David, did this fix get implemented in the most recent version? I did not see it on the list of fixes, but maybe I missed it?

The bugs have been fixed in v6.9.00 and I have added it to the Bug Fixes section of the version's changelog.

So is this correct now ?

Acer i started with 500m and then incorporated it
Cap inv i started with 20m and then injected 474m immediately and then incorporated it.

I tested v6.9.00 and created a subsidiary. The gain/loss column shows $0 which is correct - see the attached screenshot.

For the issue you encountered, could you please describe how to replicate the issue step by step?

The 2nd screenshot was after both companies went IPO.

My query was

The company (Acer) started with 500 Million showed a loss on going IPO

The company (Cap Injected) started with 20 Million then having 474 million capital injected immediately showed a gain on going IPO.

So I was trying to clarify if this was intended as they both have similar market values.. which is expected since they have almost the same funds, but the capital injection doesn't appear to dilute the share price in the way it would in real life - (from my understanding a capital injection would normally come from an external source) - and generally result in an investor taking a stake in the company in exchange for the investment (and therefore reducing everyone else's share holding).

From what I can see the capital injection is still being counted as an increase in company value when going IPO, thus showing a large gain, that isn't in fact a gain at all.

It may be that capital injection should be called a group fund transfer in the scope of this game since no change of ownership/share capital takes place as a result of an injection.

(Maybe the way around this would be to have a capital injection create further shares and assign them to the parent to prevent the erroneous gain ? Not sure if this would work - but if you see the 1st screen shot where only 2 million shares were created for Cap Injected, when I did the capital injection of 474m, if it had created an additional 47.4 million shares, then both companies would be similar at the end?