Use the Following Information to Answer the Question(s) Below $P =$

question 24

Multiple Choice

Use the following information to answer the question(s) below.

Paiva Corporation owns 80% of Ackroyd Corporation's outstanding common stock and Ackroyd owns 80% of the outstanding common stock of Bailey Corporation. Bailey Corporation owns 10% of the outstanding common stock of Ackroyd Corporation. The cost of the investments was equal to book value and there were not fair value/book value differences for the investments. The separate net incomes for the three affiliated companies for the year ended December 31, 2014 (excluding investment income) are as follows: Paiva Corporation, $100,000, Ackroyd Corporation, $50,000, and Bailey Corporation, $30,000. Use the conventional approach.

Symbols used:
$P =$ Income of Paiva on a consolidated basis
A = Income of Ackroyd on a consolidated basis
B = Income of Eailey on a consolidated basis
-The equation,in a set of simultaneous equations,that computes Paiva Corporation income on a consolidated basis is

• A)P = $50,000 + 0.8B.
• B)P = $30,000 + 0.2A.
• C)P = $100,000 + 0.2A.
• D)P = $100,000 + 0.8A.

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Definitions:

Industrial Relations School

A field of study and practice focusing on the management of workplace and labor relations, including the roles of unions, employers, and governments.

Bargaining Power

The ability of one party to negotiate favorable terms in a deal because of its leverage or strategic advantage over another party.

Collective Bargaining

The process where union representatives negotiate labor contracts with employers concerning wages, working conditions, and other employment terms.

Unions

Organizations that represent the collective interests of workers in negotiations with employers regarding pay, working conditions, benefits, and other labor issues.