Edna Company purchased 70% of the outstanding common stock of Damen Corporation. Instructions (a) Explain the relationship

Question:

Edna Company purchased 70% of the outstanding of Damen Corporation.
Instructions
(a) Explain the relationship between Edna Company and Damen Corporation.
(b) How should Edna account for its investment in Damen?
(c) Why is the accounting treatment described in (b) useful?

Common Stock
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...