On January 1, 20X6, Plus Corporation acquired 90 percent of Side Corporation for $180,000 cash. Side reported net income of $30,000 and dividends of $10,000 for 20X6, 20X7, and 20X8. On January 1, 20X6, Side reported common stock outstanding of $100,000 and retained earnings of $60,000, and the fair value of the noncontrolling interest was $20,000. It held land with a book value of $30,000 and a market value of $35,000 and equipment with a book value of $50,000 and a market value of $60,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of five years. All depreciable assets held by Side at the date of acquisition had a remaining economic life of five years. Plus uses
the equity method in accounting for its investment in Side.Based on the preceding information, what balance would Plus report as its investment in Side at January 1, 20X9?
A. $224,100
B. $215,100
C. $234,000
D. $251,100
Answer: B
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A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8 . Subsequently, the company declared a 4% stock dividend on a date when the market price was $12 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?
a. $12,800 b. $19,200 c. $32,000 d. $48,800
Which of the following is not a component of the operating budget?
A. Selling and administrative budget B. Sales budget C. Direct materials purchases budget D. Budgeted balance sheet
Stock LB has a beta of 0.5 and Stock HB has a beta of 1.5. The market is in equilibrium, with required returns equaling expected returns. Which of the following statements is CORRECT?
A. If both expected inflation and the market risk premium (rM? rRF) increase, the required return on Stock HB will increase by more than that on Stock LB. B. If both expected inflation and the market risk premium (rM? rRF) increase, the required returns of both stocks will increase by the same amount. C. Since the market is in equilibrium, the required returns of the two stocks should be the same. D. If expected inflation remains constant but the market risk premium (rM? rRF) declines, the required return of Stock HB will decline but the required return of Stock LB will increase. E. If expected inflation remains constant but the market risk premium (rM? rRF) declines, the required return of Stock LB will decline but the required return of Stock HB will increase.
Who is most likely to have strong strategy implementation capabilities?
A. Maria can complete a job in half the time as her colleagues. B. Valery typically probes with tough, incisive questions. C. Greg is often sympathetic to his team members' problems and shortcomings. D. Chong advocates promoting qualified people from within the firm. E. Jorge prefers to launch, manage, and complete projects by himself.