Webb Company Owns 90% of Jones Company

question 60

Multiple Choice

Webb Company owns 90% of Jones Company. The original balances presented for Jones and Webb as of January 1, 2013 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.
After acquiring the additional shares, what adjustment is needed for Webb's investment in Jones account?

• A) $270,000 increase.
• B) $270,000 decrease.
• C) $27,000 increase.
• D) $27,000 decrease.
• E) No adjustment is necessary.

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Definitions:

Charismatic Leadership

A leadership style characterized by the leader's ability to inspire enthusiasm, passion, and strong levels of devotion in followers.

Metaphor

A figure of speech in which a word or phrase is applied to an object or action to which it is not literally applicable, often used to help explain complex or abstract concepts.

Transformational Leader

An individual who inspires and motivates followers to achieve extraordinary outcomes by transforming their attitudes, beliefs, and values.

Self-Interest

Acting in a way that is beneficial to oneself, focusing on actions that promote individual interests and well-being.