Ryan Company owns 80% of Chase Company. The original balances presented for Ryan and Chase as of January 1, 2013 are as follows: $\begin{array}{lr}
\text { Chase Company: } & \
\text { Shares outstanding } & 50,000 \
\text { Book value } & \$ 400,000 \
\text { Book value per share } & \$ 8 \
& \
\text { Ryan Company: } &\
\text { Shares owned of Chase } & 40,000 \
\text { Book value of investment in Chase } & \$ 320,000
\end{array}$ Assume Chase reacquired 8,000 shares of its common stock from outsiders at $10 per share. What is Ryan's percent ownership in Chase after the acquisition of the treasury shares (rounded)?
A)80%.
B)95%.
C)64%.
D)76%.
E)69%.

Question

Ryan Company owns 80% of Chase Company. The original balances presented for Ryan and Chase as of January 1, 2013 are as follows: $\begin{array}{lr}
\text { Chase Company: } & \
\text { Shares outstanding } & 50,000 \
\text { Book value } & \$ 400,000 \
\text { Book value per share } & \$ 8 \
& \
\text { Ryan Company: } &\
\text { Shares owned of Chase } & 40,000 \
\text { Book value of investment in Chase } & \$ 320,000 
\end{array}$ Assume Chase reacquired 8,000 shares of its common stock from outsiders at $10 per share. What is Ryan's percent ownership in Chase after the acquisition of the treasury shares (rounded)?
A)80%.
B)95%.
C)64%.
D)76%.
E)69%.

Quizplus · Accepted Answer

After Chase reacquires 8,000 shares, the total shares outstanding become 42,000 (50,000 - 8,000). Ryan still owns 40,000 shares, so Ryan's ownership percentage is $ \frac{40,000}{42,000} \times 100 \approx 95\% $.

Ryan Company Owns 80% of Chase Company Assume Chase Reacquired 8,000 Shares of Its Common Stock from Presented