Reciprocal Ownership
Strong Manufacturing Company holds 94 percent ownership of Thorson Farm Products and 68 percent ownership of Kenwood Distributors. Thorson has excess cash at the end of 20X4 and is considering buying shares of its own stock, shares of Strong, or shares of Kenwood.
Required
If Thorson wishes to take the action that will be best for the consolidated entity, what factors must it consider in making its decision? How can it maximize consolidated net income?
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