Question

In: Accounting

35.Wayne Corporation owns 80% of Marple Corporation. Wayne Corporation also owns 45% of Tiger Corporation and...

35.Wayne Corporation owns 80% of Marple Corporation. Wayne Corporation also owns 45% of Tiger Corporation and 45% of Andrew Corporation. Marple Corporation owns 40% of Tiger Corporation and 10% of Andrew Corporation. All corporations are domestic "C" corporations. Which corporations are members of an affiliated group?

Group of answer choices

a)Marple, Tiger, and Andrew Corporations

b)Wayne, Marple, Tiger, and Andrew Corporations

c)Wayne, Marple, and Tiger Corporations

d)Wayne and Marple Corporations

Solutions

Expert Solution

An affiliated group exists where a parent company holds at least 80% of the stock in at least one other corporation in group or when at least 80% of stock or at least 80% of stock of other companies is owned through chain holdings.

Wayne corporation holds 80% in Marple corporation .Hence, both are affiliate.

Marple holds 40% in Tiger. So, chain holding for Wayne = 80*40% + 45% = 77%. Marple is not part of affiliate group

Similarly for Andrew, Chain holding for Wayne here = 80 * 10% + 45% = 53%

Hence, only wayne and marple corporations are affiliate group.

Correct option is d. Wayne and Marple Corporations

ekkarill92 answered 2 years ago
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