Oscar Buys a 10% Interest in Britanny Corporation Paying $92,000

question 66

Multiple Choice

Oscar buys a 10% interest in Britanny Corporation paying $92,000 cash on January 1,2015.During 2015,Britanny Corporation reports a loss of $30,000 and pays cash dividends to shareholders of $10,000.For 2016,Britanny Corporation has a loss of $60,000 and pays cash dividends of $20,000.If Britanny Company is organized as an S Corporation,Oscar's basis in the Britanny Corporation stock at the end of 2016 is:

• A)$80,000
• B)$86,000
• C)$92,000
• D)$98,000
• E)$104,000

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Definitions:

Coordination

The management of interdependencies between activities, tasks, and functions to achieve a harmonious operation and aligned efforts towards common goals.

Economies of Scale

Financial benefits gained by companies thanks to their large scale of operation, which typically leads to a reduction in the cost per unit of output as the scale increases.

Product Departmentation

A method of organizing a company based on the different products manufactured or services provided.

Functional Departmentation

The process of organizing a business into distinct departments, each responsible for a specific function or area, such as marketing or finance.