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Svet_ta [14]
3 years ago
10

When a parent uses the equity method throughout the year to account for its 80% investment in an acquired subsidiary, which of t

he following statements is false at the date immediately preceding the date on which adjustments are made on the consolidated worksheet?
a. Parent company net income equals controlling interest in consolidated net income.b. Parent company retained earnings equals consolidated retained earnings.c. Parent company total assets equals consolidated total assets.d. Parent company dividends equals consolidated dividends.e. Goodwill will not be recorded on the parent's books.
Business
1 answer:
ValentinkaMS [17]3 years ago
4 0

Answer:

c. Parent company total assets equals consolidated total assets

Explanation:

  • The equity method is a process of treating investment in an associated companies and is usually applied where the investor holds about 50% of the companies stocks and this has a significant influence in the later management.
  • They are recorded in the balance sheets and are associated with the companies net incomes and investments. If 80% of the investment is accounted for the subsidiary then the parent company total assess will not be equal o the total assets as it involves taxes.
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Major Construction & Manufacturing Corporation makes a side payment to a government official in India. Under the Foreign Cor
andrew-mc [135]

Answer:

A) ​Under no circumstances

Explanation:

Major Construction & Manufacturing Corporation makes a side payment to a government official in India. Under the Foreign Corrupt Practices Act, this is permitted​ Under no circumstances

3 0
3 years ago
According to the income effect, when the price of automobiles rises, people buy fewer automobiles because a. the nominal amount
belka [17]

Answer:

b. the purchasing power of their income is reduced.

Explanation:

Income effect is defined as the change in demand of a product that is a result of change in purchasing power of an individual, there are changes in real income.

When there is price increase the number of goods an individual's income can buy is reduced, so his purchasing power reduces. He will demand less of the good.

When there is a reduction in price purchasing power increases and customer can demand for more of the good.

In this scenario the increase in price of automobiles results in reduction in purchasing power, and reduction in amount demanded.

6 0
3 years ago
Read 2 more answers
Which of the following was not one of Reagan's four major policy objectives during his presidency?
AlekseyPX

Answer: D.reduce the rising taxes for middle-class citizens

Explanation:

During the tenure of President Ronald Reegan when he was the president of the United States,he promoted some economic policies which were often referred to as Reaganomics.

These policies include:

A.reduce government regulation

B. reduce federal income tax and capital gains

C.reduce growth of government spending

E.reduce inflation by controlling growth of the money supply to reduce inflation ​

It should be noted that option D "reduce the rising taxes for middle-class citizens" isn't among the policies put forward by Reegan.

6 0
3 years ago
If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.05. The company has a target debt-equity ratio of .
Serga [27]

Answer:

WACC is 10.18%

Explanation:

In order to compute the WACC for Wild Widgets,Inc,we need first of all ascertain the cost of debt kd and the cost of equity ke.

The cost of debt is the same the yield to maturity where yield to maturity can be computed using rate formula in excel:

=rate(nper,pmt,-pv,fv)

nper is  the number of years before maturity which is 30

pmt is the coupon payable on the bond,6.1%*$1000=$61

pv is the current price of the bond at $1,055

fv is the face value of the bond at $1,000

=rate(30,61,-1055,1000)

rate=5.71%

pretax cost of debt is 5.71%

In order to calculate levered cost of equity,we need to re-lever the beta value of 1.05 using the below formula:

Levered β = Unlevered β ×(1 + [(D/E) × (1−t) )

Unlevered β=1.05

D/E=0.55

tax=tax =24%=0.24

Levered β=1.05*(1+(0.55)*(1-0.24)

                =1.05*(1+(0.55)*(0.76)

                =1.49

Levered cost of equity is then computed using the levered beta of 1.49

      Ke=risk free rate+Levered beta*(market return-risk-free rate)

risk free rate is 3.2%          

market return is 10%

ke=3.2%+1.49(10%-3.2%)

ke=13.33%

WACC=Ke*(E/V)+Kd*(D/V)*(1-t)

Ke is 13.33%

kd is 5.71%

D/E=0.55=0.55/1 which means that debt has 0.55 equity has 1

D/V=D/E+V=0.55/1+0.55=0.35

E/V=E/E+V=1/(1+0.55)=0.65

WACC=13.33%*0.65+5.71%*(0.35)*(1-0.24)

           =13.33%*0.65+5.71%*(0.35)*(0.76)

           =0.086645 +0.0151886

           =10.18%

           

6 0
3 years ago
Open market operations refer to the buying and selling of ________ by the ________ to control the money supply. stocks and bonds
nikitadnepr [17]

Answer:

Open market operations refer to the buying and selling of Treasury securities by the Federal Reserve to control the money supply.  

4 0
3 years ago
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