Pet Corporation owns 90 percent of Sod Corporation's common stock and Sod owns 15 percent of Pet,
Question:
1. If the treasury stock approach is used, Pet's income and controlling share of consolidated net income for 2016 will be computed:
a. $100,000 + (90% x $60,000)
b. $100,000 + (90% x $67,500)
c. $100,000 + (90% x $67,500) - (90% x $30,000)
d. ($100,000 + $60,000) - (10% x $67,500)
2. If the conventional approach is used, Pet's income on a consolidated basis is denoted P = $100,000 + $0.9S and Sod's income on a consolidated basis is denoted S = $60,000 + 0.15P. Given these equations, the controlling share of consolidated net income is equal to:
a. P
b. 0.85P
c. P - 0.1S
d. P + S - 0.15S
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
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Related Book For
Advanced Accounting
ISBN: 978-0134472140
13th edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith
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