Pink Corporation, Which Owns Stock in Sienna Corporation, Had Net

question 4

Multiple Choice

Pink Corporation, which owns stock in Sienna Corporation, had net operating income of $125,000 for the year.Sienna pays Pink a dividend of $60,000.Pink takes a dividends received deduction of $48,000.Which of the following statements is correct?

• A)Pink owns less than 20% of Sienna Corporation.
• B)Pink owns 20% or more, but less than 80% of Sienna Corporation.
• C)Pink owns 80% of Sienna Corporation.
• D)Pink owns more than 80% of Sienna Corporation.
• E)None of the above.

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Definitions:

Activity

Activity in the business context generally refers to any action or operation within a company, ranging from financial transactions to employee tasks that contribute to the company's goals.

Cost Object

Any item for which a separate measurement of costs is desired, including products, services, projects, or customers.

Equivalent Units

A concept in cost accounting used to allocate production costs to units of output, considering partially completed units as a fraction of full units.

Production Costs

Expenses directly incurred in the process of manufacturing goods, including materials, labor, and overhead.