REFERENCE: Ref.07_10 Alpha Corporation Owns 100 Percent of Beta Company,and Beta Owns

question 88

Multiple Choice

REFERENCE: Ref.07_10
Alpha Corporation owns 100 percent of Beta Company,and Beta owns 80 percent of Gamma,Inc. ,all of which are domestic corporations.Information for the three companies for the year ending December 31,2009 follows:

-What is the noncontrolling interest in Gamma's income for 2009?

• A)$0.
• B)$9,600.
• C)$10,000.
• D)$19,200.
• E)$20,000.

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Definitions:

Dividend Payments

Payments made by a corporation to its shareholder members, usually derived from the company's profits.

Discount Rate

A rate used to convert future cash flows into their present value, reflecting the opportunity cost of capital or the interest rate.

Perpetuity

An annuity that pays a constant amount to an investor at regular periods forever.

Discount Rate

The rate of interest applied in the evaluation of discounted cash flows to calculate the current value of future cash movements.