If Corporation A owns 25% stock in Corporation B, and B owns 50% stock in A?

Question

And corporation A has $1,000,000 in non-stock assets, corporation B has $10,000,000 in non-stock assets, what is the total worth of each A and B? The sum cannot exceed $11,000,000 because that's all the hard assets there are. The worth of a corporation includes value of stock it owns of other corporations.

Read the fine print, flaking

Bear, A owns 1m in hard assets, B owns 10m hard assets. Let's say that they aren't public corporations, so we don't go by "perceived public value of corporate stock". Let's say that you're an assessor trying to determine the realtive values of A and B, knowing that it has to add up to 11m.

Corporations A and B could just be paper corporations holding the hard assets, the only value they have are in the hard assets. So, what's the "net asset" of each, then?

Well, Mr. Bear, it seems that you, even as a financial auditor, don't seem to have an answer for this problem.

Bear, I've actually had to try to deal with this kind of problem before, and it always seems to lead to arguments. It's a fun problem, it gets people angry. Unfortunately, it's become an increasingly common occurence for corporations to own stock in each other.

Bear, using your reasoning, let's imagine that A owns 99.9% of B and B owns 99.9% of A. Then the total "worth" of A and B would be almost 5.5 BILLION. Now, is there any wonder why people believe that corporate accounting is hooey?

Answer 1

Since A owns 50% of the 1M (500,000) and 25% of the 10M (2,500,000), I would guess Corporation A's total worth is $3M. Corporation B would be 50% of 1M (500,000) and 75% of the 10M (7,500,000), resulting in Corporation B's total worth of $8M.

Of course, this is all assuming that only Corporation A and Corporation B are involved (no other investors).

Answer 2

At first lets examine the claim that
"The sum cannot exceed $11,000,000 because that's all the hard assets there are."

Lets consider a simple example:
Bob owns 100% of Corporation C.
Corporation C owns $1M and 100% of Corporation D.
Corporation D owns $10M.

What is the value of D? Simple: $10M.
What is the value of C? Simple: $11M.
What is the value of Bob's holdings? Simple: $11M.
What is sum of C and D values?
Does the sum exceed $11M "all the hard assets there are"?


Now back to original problem.
a = $1M + 25% b
b = $10M + 50% a

a = $4M
b = $12M

A completly different question would be:
if Bob owns the remaining 50% of A and
Alice owns the remaining 75% of B what
are the values of Bob' and Alice's holdings?
Bob: 50% * $4M = $2M
Alice: 75% * $12M = $9M

Not suprisingly $2M + $9M = $11M

Answer 3

i will pass for prime value lists between competing us of a. This easily restricts substitute between countries, no matter if you're attempting this on imported or exported products. besides the actual shown reality that governments can get sales from those value lists, it basically encourages the black marketplace venture or smuggling.

Answer 4

You left off the actual question from your homework.

You remembered to type the background data on the question, but left out the actual question.