REFERENCE: Ref.01_16 Renfroe,Inc.acquires 10% of Stanley Corporation on January 1,2007,for $90,000 When

question 28

Multiple Choice

REFERENCE: Ref.01_16
Renfroe,Inc.acquires 10% of Stanley Corporation on January 1,2007,for $90,000 when the book value of Stanley was $ 1,000,000.During 2007,Stanley reported net income of $215,000 and paid dividends of $50,000.On January 1,2008,Renfroe purchased an additional 30% of Stanley for $325,000.Any excess of cost over book value is attributable to goodwill with an indefinite life.During 2008,Renfroe reported net income of $320,000 and paid dividends of $50,000.
-How much is the adjustment to the Investment in Stanley Corporation for the change from the fair-value method to the equity method on January 1,2008?

• A)A debit of $16,500.
• B)A debit of $21,500.
• C)A debit of $90,000.
• D)A debit of $165,000.
• E)There is no adjustment.

Comprehend price/earnings to growth ratio and its application in evaluating stocks.

Grasp the mechanics and implications of buying stocks on margin, stock splits, and selling short.

Understand investment strategies such as dollar-cost averaging, initial public offerings (IPO), and direct investment plans.

Understand the concept of stock market dynamics, including bubbles and market capitalization.

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Definitions:

Population Increases

Refers to the growth in the number of individuals in a population over time.

Tree Base

The bottom part of a tree, including the roots and the lower trunk, crucial for stability and nutrient absorption.

Homoplasy

Homoplasy describes a character state similarity not due to shared descent (for example, produced by convergent evolution or evolutionary reversal).

Orthologs

Genes in different species that evolved from a common ancestral gene and retain the same function.