From the Information Below,select the Optimal Capital Structure for Mountain

question 51

Multiple Choice

From the information below,select the optimal capital structure for Mountain High Corp.

• A)Debt = 40%;Equity = 60%;EPS = $2.95;Stock price = $26.50
• B)Debt = 50%;Equity = 50%;EPS = $3.05;Stock price = $28.90
• C)Debt = 60%;Equity = 40%;EPS = $3.18;Stock price = $31.20
• D)Debt = 80%;Equity = 20%;EPS = $3.42;Stock price = $30.40
• E)Debt = 70%;Equity = 30%;EPS = $3.31;Stock price = $30.00

Identify the criteria for significant influence and its implications for equity accounting.

Adjust the investor's share of profit for intra-group transactions resulting in unrealised profits.

Understand and apply the concept of significant influence in determining the need for equity accounting.

Recognize and calculate goodwill arising from the acquisition of an interest in an associate.

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Definitions:

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An individual, typically a student or recent graduate, undergoing supervised practical training in a professional setting.

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Bodies of the government responsible for the oversight and administration of specific functions, such as enforcement of laws, regulation of industries, and the provision of various services.

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Organizations that provide a range of insurance policies to protect individuals or entities against potential financial losses.

Corporations

Legal entities that are separate and distinct from their owners, capable of owning property, entering into contracts, and being sued.