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Deffense [45]
2 years ago
12

Moss Corp. owns 20% of Dobro Corp.’s preferred stock and 80% of its commonstock. Dobro’s stock outstanding at December 31, Year

1, is as follows:10% cumulative preferred stock - $100,000, Common stock - 700,000. Dobro reported net income of $60,000 for the year ended December 31, Year 1. What amount should Moss record as equity in earnings of Dobro for the year endedDecember 31, Year 1?
Business
1 answer:
Yakvenalex [24]2 years ago
3 0

Answer:

The correct answer of the following question is $42,000.

Explanation:

Given information -

Moss owns 20% of Dobro's preferred stock and 80 % of outstanding common stock.

Preferred stock (10%) $100,000

Common stock - $700,000

Dobro earnings for year 1, December 31 - $60,000

Here the equity method with consolidation will be used, which means the net income from subsidy would be recognized by Moss corp up to the interest.

therefore, we can calculate the earnings available for common stock and preferred stock.

Earnings available for preferred stock - $100,000 x 10% x 20%

= $10,000 x 20%

= $2000

Earnings available for common stock =

Total earnings from Dobro - Cumulative preference dividend

= $60,000 - $10,000 ( $100,000 x 10% )

= $50,000

Now on this $50,000 we will take out 80% of the interest that Moss owns

$50,000 x 80%

= $40,000

Therefore the total amount of earnings = $2000 + $40,000

= $42,000

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Difference between monopoly and perfectly competitive market structure ​
zmey [24]

Answer:

see below

Explanation:

1. In a monopoly, one firm dominates a large market. Only one seller is serving a large number of buyers. In a perfectly competitive market structure, many sellers are competing to sell to many buyers.

2. A monopoly has no competition for its products. There are no close substitutes, which leaves customers with no other option but to buy from the monopoly. In perfect competition, sellers sell identical products. There is stiff competition for the product being sold.

3. In a monopoly, there are strong barriers to entry and exit from the market. In a perfectly competitive market, restrictions on entry or exit are absent.

4. The price for a monopoly is always set above the average cost, while in perfect competition, the price set is equal to the marginal cost.

5. A monopoly has full control over its price and can offer different prices to different groups of customers. In a perfects competition, the firms cannot practice price discrimination because they have no control over prices.

5 0
2 years ago
Why do firms generally prefer to borrow funds to obtain long-term financing rather than issue shares of stock?
Juli2301 [7.4K]
The more firms get from obligation as opposed to issuing stocks, the more it can diminish the aggregate cost of capital in light of the fact that the enthusiasm from obligation is duty deductible which will help reduce the aggregate cost of capital. In any case, no firm can get from obligation everlastingly in light of the fact that, at one point in time, extra obligation financing will make the aggregate cost of capital increment rather than decline. So firms will get in view of their own enhanced capital structure to limit the aggregate cost of capital however much as could reasonably be expected. Also, in light of this upgraded capital structure, there is a point of confinement to how much a firm can keep getting from obligation.
4 0
3 years ago
Both the medical model and the public health model have in common:
STALIN [3.7K]
<span>Both the medical model and the public health model have in common a desire to educate people about their health, healthy options, and consequences of not paying attention to health issues. The medical model may, at times, include too much information for some to understand the bottom-line, while the public health model may be watered down in an attempt to reach the masses.</span>
5 0
2 years ago
Determine the tax consequences to Euclid from the following independent events. Round the per share answer to the nearest cent.
Levart [38]

Answer:

$100 per share

Explanation:

Complete question: <em>As a result of the stock dividend, Euclid's per share basis is $?</em>

<em />

The Total stock is 500 shares for $50,000 Basis = 50,000 / 500 = $100

Hence, Euclid's per share basis is = $100 per share

8 0
3 years ago
Natalie makes $2000 per month she spends 100 on credit card payments what is her debt to income ratio
chubhunter [2.5K]
Monthly income = 2000 dollars
Debt to pay = 250 + 100 = 350 dollars
Let's find the ratio of debt to income.
=> 350 / 2000 = 0.175
=> 0.175 * 100 = 17.5 percent.
Thus 17.5% of his salary goes to his debts for credit card and auto loan.
5 0
2 years ago
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