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Webb Company purchased 90% of Jones Company for $990,000 when the book value of Jones was $1,000,000. Jones currently has 100,000 shares outstanding and a book value of $1,200,000.Jones sells 20,000 shares of previously unissued shares of its common stock to outside parties for $10 per share.What is the adjusted book value of Jones after the sale of the shares?
A) $200,000.
B) $1,400,000.
C) $1,280,000.
D) $1,050,000.
E) $1,440,000.
Adjusted Book Value
The net worth of a company, calculated by adjusting the assets' and liabilities' book value on the balance sheet to reflect their true market value.
Common Stock
A form of corporate equity ownership, representing a claim on a portion of the company’s assets and earnings.
Stock Sale
The transaction or process of selling shares in a company to investors, transferring ownership in exchange for capital.
- Learn about the mechanics and repercussions of share transactions and acquisitions on the authority over subsidiaries and the stakes of the parent company.
- Identify the principles of accounting and modifications related to treasury and newly issued shares in the context of consolidation.
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Learning Objectives
- Learn about the mechanics and repercussions of share transactions and acquisitions on the authority over subsidiaries and the stakes of the parent company.
- Identify the principles of accounting and modifications related to treasury and newly issued shares in the context of consolidation.
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