On January 1 2013, Pounder Company purchased 75% of SludgeSmile Company for $500,000.SludgeSmile Company's stockholders' equity on that date was equal to $600,000 and SludgeSmile Company had 60,000 shares issued and outstanding on that date.SludgeSmile Company Corporation sold an additional 15,000 shares of previously unissued stock on December 31, 2013.
Assume SludgeSmile Company sold the 15,000 shares to outside interests, Pounder Company's percent ownership would be:

Question

Quizplus · Accepted Answer

Pounder Company initially owned 75% of 60,000 shares, which is 45,000 shares. After SludgeSmile issued 15,000 new shares, the total shares became 75,000. Pounder's ownership is now 45,000/75,000, which is 60%.

On January 1 2013, Pounder Company Purchased 75% of SludgeSmile