On January 1, 2013, P Corporation purchased 75% of S Corporation for $500,000.S's stockholders' equity on that date was equal to $600,000 and S had 40,000 shares issued and outstanding on that date.S Corporation sold an additional 8,000 shares of previously unissued stock on December 31, 2013.
Assume that P Corporation purchased the additional shares what would be their current percentage ownership on December 31, 2013?
A)62 1/2%.
B)75%
C)79 1/6%
D)100%

Question

Quizplus · Accepted Answer

Initially, P Corporation owned 75% of S Corporation's 40,000 shares, which is 30,000 shares. After S Corporation issued an additional 8,000 shares, the total shares became 48,000. If P Corporation purchased all 8,000 new shares, they would own 38,000 shares out of 48,000, which is 79 1/6%.

On January 1, 2013, P Corporation Purchased 75% of S