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?
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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F41e0462e-bb50-4e07-9d90-a5020031f84f%2F7ff73744-9ad3-43eb-8665-8a97970920de%2F57taja9_processed.jpeg&w=3840&q=75)
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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