On January 1, 2010, Jones Company Bought 15% of Whitton

question 10

Multiple Choice

On January 1, 2010, Jones Company bought 15% of Whitton Company. Jones paid $150,000 for these shares, an amount that exactly equaled the proportionate book value of Whitton. On January 1, 2011, Whitton acquired 80% ownership of Jones. The following data are available concerning Whitton's acquisition of Jones:
Consideration transferred for 80% interest, January 1, 2011: $800,000
Jones' reported book value, January 1, 2011: 900,000
Excess fair value over book value (assigned to trademarks) is amortized over 20 years.
The initial value method is used by both companies.
The following information is available regarding Jones and Whitton:
-What is the 2011 consolidated net income for Whitton and Jones companies?

• A) $199,000.
• B) $190,000.
• C) $185,000.
• D) $184,000.
• E) $176,000.

Understand the applications and limitations of the concept of absolute advantage in trade.

Comprehend the economic rationale for and against free trade and the various barriers to trade.

Recognize the economic and non-economic benefits of international trade.

Understand the mechanisms through which trade affects national economies and global competitiveness.

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Definitions:

Triangle Arbitrage

A risk-free profit that arises from discrepancies between three foreign currencies in the foreign exchange market.

Profit

The financial gain realized when the revenue from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

British Pounds

The official currency of the United Kingdom, also known as sterling, symbolized by £.

Cash Inflows

Funds being received by a company or individual, which could originate from sales, financing, or investments.