A Ltd Owns 80% of B Ltd and B Ltd

question 6

Multiple Choice

A Ltd owns 80% of B Ltd and B Ltd owns 60% of C Ltd.Using the sequential consolidation method,the sequence of consolidation would be:

• A) A with B and then consolidated A with C.
• B) B with C and then consolidated B with A.
• C) A, B and C together.
• D) none of the above.

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Definitions:

Market Price

The current price at which an asset or service is bought or sold in the marketplace.

Capital Accounts

Financial records showing the ownership interests and funds contributed or withdrawn by owners or investors in a company.

Target Capital Structure

The ideal mix of debt, preferred stock, and common equity that a company aims to hold in order to minimize its cost of capital and maximize its value.

Floatation Costs

Expenses incurred by a company in issuing new securities, including underwriting fees and registration fees.