Webb Company Owns 90% of Jones Company

question 13

Multiple Choice

Webb Company owns 90% of Jones Company. The original balances presented for Jones and Webb as of January 1, 2011 are as follows:

Assume Jones issues 20,000 new shares of its common stock for $15 per share. Of this total, Webb acquires 18,000 shares to maintain its 90% interest in Jones.

What is the adjusted book value of Jones after the stock issuance?

• A) $1,500,000.
• B) $1,200,000.
• C) $1,350,000.
• D) $1,080,000.
• E) $1,335,000.

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Definitions:

Direction

In statistics, it often refers to the nature of the relationship between variables, indicating whether they move together in a positive or negative correlation.

Pearson Correlation

A measure of the linear correlation between two variables, giving a value between -1 and 1.

Linearity

The attribute of a relationship between two variables where the change in the outcome is directly proportional to the change in the predictor.

Predictability

The extent to which future states or conditions of a system can be forecasted based on existing data or patterns.