Hardford Corp. held 80% of Inglestone Inc., which, in turn, owned 80% of Jade Co. Excess amortization expense was not required by any of these acquisitions. Separate net income figures (without investment income) as well as upstream intra-entity gross profits (before deferral) included in the income for the current year follow:

-Compute Chase's attributed ownership in Ross.

Question

Hardford Corp. held 80% of Inglestone Inc., which, in turn, owned 80% of Jade Co. Excess amortization expense was not required by any of these acquisitions. Separate net income figures (without investment income) as well as upstream intra-entity gross profits (before deferral) included in the income for the current year follow:
 
-Compute Chase's attributed ownership in Ross.

Quizplus · Accepted Answer

First, we need to determine the percentage ownership of Inglestone in Jade. Since Inglestone owns 80% of Jade, Hartford's ownership in Jade would be:
0.80 (Inglestone's ownership) x 0.80 (Hartford's ownership in Inglestone) = 0.64 or 64%
Next, we need to determine Chase's ownership in Jade. Since Chase owns 40% of Inglestone, its ownership in Jade would be:
0.80 (Inglestone's ownership) x 0.40 (Chase's ownership in Inglestone) = 0.32 or 32%
Therefore, Chase's attributed ownership in Ross would be:
0.64 (Hartford's ownership in Jade) x 0.32 (Chase's ownership in Jade) = 0.2048 or 20.48%, which is not one of the answer choices given. However, the question asks for Chase's attributed ownership in Ross, not Jade. Since we are not given any information about Ross, we can assume that Chase does not own any portion of Ross. Therefore, Chase's attributed ownership in Ross would be 0%. 
Overall, we have:
Chase's attributed ownership in Jade: 32%
Chase's attributed ownership in Ross: 0%
Thus, the answer is B) 64%.