REFERENCE: Ref.06_02 Stoop Co.owned 80% of the Common Stock of Knight Co.Knight

question 115

Multiple Choice

REFERENCE: Ref.06_02
Stoop Co.owned 80% of the common stock of Knight Co.Knight had 50,000 shares of $5 par value common stock and 2,000 shares of preferred stock outstanding.Each preferred share received an annual per share dividend of $10 and is convertible into four shares of common stock.Stoop did not own any of Knight's preferred stock.Knight also had 600 bonds outstanding,each of which is convertible into ten shares of common stock.Knight's annual after-tax interest expense for the bonds was $22,000.Stoop did not own any of Knight's bonds.Knight reported income of $300,000 for 2009.
-Knight's diluted earnings per share (rounded) is calculated to be

• A)$5.62.
• B)$3.26.
• C)$3.11.
• D)$5.03.
• E)$4.28.

Understand the legal and practical distinctions between employees and independent contractors, including their different legal implications.

Recognize the significance of written documents, such as power of attorney, in granting authority to agents.

Comprehend the legal consequences of actions taken by agents on behalf of principals, including tort liability.

Grasp the nuanced differences between various agency concepts like agent by estoppel, gratuitous agents, and exclusive agency contracts.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset over its life up to a specific date.

Office Equipment

Assets used in an office environment to facilitate operations, such as computers, printers, and furniture, which are subject to depreciation.

Cash Proceeds

The amount of money received from transactions such as sales, financing, or the sale of assets.

Amortization

Amortization is the process of spreading the cost of an intangible asset over its useful life, similar to depreciation but for non-physical assets.