Pls explain in detail

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter15: Dividend Policy
Section: Chapter Questions
Problem 6P
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Pls explain in detail

A pharmaceutical and financial investment company both have market value (total stock
value) of $500 million. Which statement is most correct?
a. They may have different net asset values because one company is more ethical than
the other.
O b. Both companies must have similar net asset value.
O c. They may have different net asset values because in accounting the fair value of stocks
used in the financial investment company is included on the GAAP balance sheet as an
asset yet the value of a patented drug developed by the pharmaceutical company is
NOT included.
O d. Both companies have the same tax liability.
Transcribed Image Text:A pharmaceutical and financial investment company both have market value (total stock value) of $500 million. Which statement is most correct? a. They may have different net asset values because one company is more ethical than the other. O b. Both companies must have similar net asset value. O c. They may have different net asset values because in accounting the fair value of stocks used in the financial investment company is included on the GAAP balance sheet as an asset yet the value of a patented drug developed by the pharmaceutical company is NOT included. O d. Both companies have the same tax liability.
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