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.

Assets Liabilities and stockholders equity

Scully Corporation

Common stock holdings

Company A $40,000 Long-term debt $40,000

Company B 60,000 Preferred stock 25,000

Total $100,000 Common stock equity 35,000

Total $100,000

Company A

Current Assets $100,000 Critical liabilities $100,000

Fixed Assets 400,000 Long-term debt 200,000

Total $500,000 Common stock equity 200,000

Total $500,000

Company B

Current assets $180,000 Current liabilities $100,000

Fixed assets 720,000 Long-term debt 500,000

Total $900,000 Common stock equity 300,000

Total $900,000

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