Holding company Scully Corporation holds enough stock in company B to give it voting control of both firms. Consider the accompanying simplified balance sheets for these companies.
a) What percentage of the total assets controlled by Scully Corporation does its common stock equity represent?
b) If another company owns 15% of the common stock of Scully Corporation and, by virtue of the fact, has voting control, what percentage of the total assets controlled does the outside company's equity represent?
c) How does a holding company effectively provide a great deal of control for a small dolla investment?
d) Answers parts and b in light of the following additional facts.
1) Company A's fixed assets consist of $20,000 of common stock Company C. This level of ownership provides voting control.
2) Company C's total assets consist of $60,000 of stock in both Company D's $50,000 of total assets.
3) Company B's fixed assets consistof$60,000 of stock in both Company E and Company F. In both cases, this level of ownership gives it voting control. Companies E and F have total assets of $300,000 and $400,000 respectively.