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.
What is the adjusted book value of Jones after the stock issuance?
A) $1,500,000.
B) $1,200,000.
C) $1,350,000.
D) $1,080,000.
E) $1,335,000.

Question

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.
What is the adjusted book value of Jones after the stock issuance?
A) $1,500,000. 
B) $1,200,000. 
C) $1,350,000. 
D) $1,080,000. 
E) $1,335,000.

Quizplus · Accepted Answer

Starting BV $1,200,000 + Add'l Shares Sold $300,000 ($15 × 20,000) = $1,500,000 Current BV

Webb Company Owns 90% of Jones Company