Gamma Co Owns 80% of Delta Corp

question 42

Essay

Gamma Co. owns 80% of Delta Corp., and Delta Corp. owns 15% of Gamma Co. The two companies use the treasury stock approach to account for mutual ownership. How should Delta Corp.'s ownership interest in Gamma Co. be accounted for in the consolidation?

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Definitions:

Executed

A term applied to a contract in which all of the terms have been fully performed.

Implied-In-Law

A legal obligation arising not from explicit agreement but from a duty inherent in social or legal traditions.

Without Reserve

An auction term indicating that an item will be sold to the highest bidder regardless of the price, without any minimum bid restriction.

With Reserve

Pertains to an auction or sale condition where the item is sold only if it meets a minimum bid or criteria set by the seller.