Pallet Corporation Owns 80% of Adelt Corporation and Adelt Owns

question 8

Multiple Choice

Pallet Corporation owns 80% of Adelt Corporation and Adelt owns 60% of Bajo Inc.Which of the following is correct?

• A)Bajo should not be consolidated because noncontrolling interests hold 52%.
• B)Bajo should be consolidated because the 60% of Bajo stock is held in the affiliate structure.
• C)Pallet has 8% indirect ownership of Bajo.
• D)Pallet has 80% indirect ownership of Bajo.

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Definitions:

Utilities

Expenses for basic services like electricity, water, and gas required for a business's operations.

Managerial Salaries

Compensation paid to individuals who are responsible for overseeing and directing the operations within a company or organization.

Overapplied

A situation in cost accounting where the allocated cost is greater than the actual cost, often requiring adjustment.

Machine Hours

A measure of production time or operational usage, calculated by the number of hours a machine is run in a specific period.