Ryan Company Owns 80% of Chase Company Assume Chase Issues 30,000 Additional Shares Common Stock Solely to Presented

question 87

Multiple Choice

Ryan Company owns 80% of Chase Company. The original balances presented for Ryan and Chase as of January 1, 2011, are as follows: $\begin{array}{l}\text { Chase Company: }\\\begin{array}{lr}\text { Shares outstanding } & 50,000 \\\text { Book value } & \$ 400,000 \\\text { Book value per share } & \$ 8\\\\\text { Ryan Company: }\\\text { Shares owned of Chase } & 40,000 \\\text { Book value of investment in Chase } & \$ 320,000\end{array}\end{array}$ Assume Chase issues 30,000 additional shares common stock solely to Ryan for $12 per share.
-After acquiring the additional shares, what adjustment is needed for Ryan's investment in Chase account?

• A) $70,000 increase.
• B) $70,000 decrease.
• C) $15,000 increase.
• D) $15,000 decrease.
• E) No adjustment is necessary.

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Definitions:

Indifference Map

A collection of indifference curves that represent a consumer’s preferences for various combinations of goods, illustrating how those preferences change with different bundles.

Marginal Rate

The marginal rate typically refers to the amount of change in one variable due to a unit change in another, commonly used in economics to describe rates of substitution or transformation.

Indifference Curve

A graph showing different combinations of two goods that give the consumer equal satisfaction and utility.

Marginal Rate

Marginal rate commonly refers to the change in one variable relative to a unit change in another, such as in taxation or interest.