Stock Issues on Investment Account: Tuscola and Arcola
Not what you're looking for?
Arcola, Inc., acquires all 40,000 shares of Tuscola Company for 725,000. A year later, when Arcola's equity adjusted balance in its investment in Tuscola issues an additional 10,000 shares to outside investors for 25.00 per share. Which of the following best describes the effect of Tuscola's stock issues on Arcola's investment account?
a) No effect because the shares were all sold to outside parties. b) The investment account is reduced because Arcola now owns a smaller percentage of Tuscola.
c) The investment account is increased because Arcola's share of Tuscola's Value has increased.
d) No effect because Arcola maintains control over Tuscola despite the new stock issue.
Purchase this Solution
Solution Summary
Provides steps necessary to determine the correct answer.
Solution Preview
The original share of T's value 725,000
New issuance(10000*25) ...
Purchase this Solution
Free BrainMass Quizzes
Operations Management
This quiz tests a student's knowledge about Operations Management
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
Basics of corporate finance
These questions will test you on your knowledge of finance.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce