Holding companyScully Corporation holds enough stock in company A and company B to give it voting control of both firms. Consider the accompanying simplified balance sheets for these companies,

b.If another company owns

15.6%

of the common stock of Scully Corporation and, by virtue of this 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 dollar investment?

d.Answer parts a and b in light of the following additional facts.

(1) Company A's fixed assets consist of

$21,000

of common stock in company C. This level of ownership provides voting control.

(2) Company C's total assets of

$396,000

include $15,000 of stock in Company D, which gives Company C voting control over company D's

$48,000

of total assets.

(3) Company B's fixed assets consist of

$56,000

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

$296,000

and

$405,000,

respectively.