Question: On August 3 1 , Year 6 , Plow Inc. purchased 7 5 percent of the outstanding common shares of Share Inc. for $ 7

On August 31, Year 6, Plow Inc. purchased 75 percent of the outstanding common shares of Share Inc. for $750,000. On January 1, Year 6, Share had common shares of $500,000 and retained earnings of $240,000. At the date of acquisition, plant and equipment on Shares books was undervalued by $40,000. This plant had a remaining useful life of five years. The balance of the acquisition differential was allocated to unrecorded trademarks of Share to be amortized over a 10-year period. Shares net income for Year 6 was $90,000, earned evenly throughout the year. On December 15, Year 6, Share declared and paid dividends of $10,000.
On December 31, Year 6, Plow sold 20 percent of its 75 percent interest in Share for $160,000.
What percentage of Share does Plow own after the disposition?
Multiple Choice
60 percent
67.5 percent
55 percent
85 percent

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!