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AUSTERE Co. owns 20% of the ordinary shares of SEVERE, Inc. SEVERE additionally has redeemable preference shares outstanding with a dividend rate of 6% and a par value of $8,000,000. SEVERE made a profit of $4,000,000 during the year and paid a cash dividend of $150,000 to preference shareholders. How much of SEVERE's profit does AUSTERE get?

AUSTERE Co. owns 20% of the ordinary shares of SEVERE, Inc. SEVERE additionally has redeemable preference shares outstanding with a dividend rate of 6% and a par value of $8,000,000. SEVERE made a profit of $4,000,000 during the year and paid a cash dividend of $150,000 to preference shareholders. How much of SEVERE's profit does AUSTERE get?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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AUSTERE Co. owns 20% of the ordinary shares of SEVERE, Inc. SEVERE additionally has redeemable preference shares outstanding with a dividend rate of 6% and a par value of $8,000,000. SEVERE made a profit of $4,000,000 during the year and paid a cash dividend of $150,000 to preference shareholders. How much of SEVERE's profit does AUSTERE get? 704,000 800,000 S/2,000 770,000
Transcribed Image Text:AUSTERE Co. owns 20% of the ordinary shares of SEVERE, Inc. SEVERE additionally has redeemable preference shares outstanding with a dividend rate of 6% and a par value of $8,000,000. SEVERE made a profit of $4,000,000 during the year and paid a cash dividend of $150,000 to preference shareholders. How much of SEVERE's profit does AUSTERE get? 704,000 800,000 S/2,000 770,000
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