Answer:
a.when a corporation owns more than 50% of the common stock of another company
Explanation:
Many a times, a parent company holds stock in it's own subsidiary company. Consolidation refers to presentation of combined profitability of a group wherein a Parent Co holds majority of the common stock i.e more than 50% of the common stock in it's subsidiary.
Such a presentation presents the combined picture of a group and helps in better comprehension and understanding by the users of the financial statements.
If a parent owns 100% stock in it's subsidiary, such subsidiary is referred to as a wholly owned subsidiary.
Based on the U.S. Treasury bond rate, the market return and the beta, Davcher's expected rate of return would be 6.5%.
<h3>What is the expected rate of return?</h3>
Using the Capital Asset Pricing Model (CAPM), the expected rate of return would be:
= Risk free rate + Beta x Market premium
Market premium:
= Market return - risk free rate
= 8% - 3% rate of treasury bonds
= 5%
Expected rate of return is:
= 3% + 0.70 x 5%
= 6.5%
Find out more on the Capital Asset Pricing Model at brainly.com/question/15851284.
Answer:
The amount in September would Excom debit Product Warranty Expense is $805
Explanation:
According to the given data In order to calculate the amount in September would Excom debit Product Warranty Expense we would have to make the following calculation:
Product warranty expense
= 700 radios * 5% * cost per radio $23
Product warranty expense
=35*$23
Product warranty expense
=$805
The amount in September would Excom debit Product Warranty Expense is $805
Answer: Increasing current profits when doing so lowers the value of the company's equity.
Explanation:
The main purpose of a company is to increase the wealth of shareholders. In their capacity as stewards for the company, managers should be working therefore to achieve this goal.
When management neglects this goal and begins to seek an improvement in their welfare and wealth instead of the shareholder', this is an Agency problem.
If a Financial manager is increasing current profits even though doing so will lower the value of the company's equity, this can create an agency problem because the shareholders are suffering but the finance manager might get rewarded for increasing profits.
