Ryan Company owns 80% of Chase Company. The original balances presented for Ryan and Chase as of January 1, 2013 are as follows: Assume Chase reacquired 8,000 shares of its common stock from outsiders at $10 per share.
What is Ryan's percent ownership in Chase after the acquisition of the treasury shares (rounded)?
A) 80%.
B) 95%.
C) 64%.
D) 76%.
E) 69%.

Question

Ryan Company owns 80% of Chase Company. The original balances presented for Ryan and Chase as of January 1, 2013 are as follows:  Assume Chase reacquired 8,000 shares of its common stock from outsiders at $10 per share.
What is Ryan's percent ownership in Chase after the acquisition of the treasury shares (rounded)?
A) 80%. 
B) 95%. 
C) 64%. 
D) 76%. 
E) 69%.

Quizplus · Accepted Answer

Shares Outstanding 50,000 × .80 = 40,000 Parent's Shares before Treasury Purchase50,000 - 8,000 = 42,000 New Outstanding Shares after Treasury Purchase40,000/42,000 = 95% New Ownership Percentage

Ryan Company Owns 80% of Chase Company