Ryan Company purchased 80% of Chase Company for $270,000 when Chase's book value was $300,000. Chase has 50,000 shares outstanding and currently has a book value of $400,000.Assume Chase issues 30,000 additional shares common stock solely to Ryan for $12 per share.What is the new percent ownership Ryan owns in Chase?
A) 80.0%.
B) 87.5%.
C) 90.0%.
D) 75.0%.
E) 82.5%.

Question

Quizplus · Accepted Answer

Ryan's original ownership percentage was 80% ($270,000/$300,000). After the issuance of additional shares, Ryan's ownership percentage becomes:(270,000 + 30,000 x $12) / (400,000 + 30,000 x $12) = 87.5%

Ryan Company Purchased 80% of Chase Company for $270,000 When