Sun Company Owns 75% of Moon Inc

question 53

Multiple Choice

Sun Company owns 75% of Moon Inc., how would Sun's financial statements be prepared?

• A)On a consolidated basis.
• B)On a specific purpose basis.
• C)On a subsidiary basis.
• D)On a financial basis.

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Definitions:

Legal Capital

The portion of a company's equity that cannot legally be distributed to shareholders as dividends, usually related to the par value of common and preferred shares.

Par Value

The nominal or face value of a bond, share of stock, or coupon as stated by the issuer, which does not necessarily reflect market value.

Stock Exchange

A regulated marketplace where securities, such as stocks and bonds, are bought and sold.

Private Corporation

A privately-owned company where ownership is either by non-governmental organizations or by a relatively small number of shareholders or company members which does not offer or trade its company stock (shares) to the general public on the stock market exchanges, but rather the company's stock is offered, owned and traded or exchanged privately.