When Consolidating a Subsidiary That Was Acquired on a Date

question 106

Multiple Choice

When consolidating a subsidiary that was acquired on a date other than the first day of the fiscal year, which of the following statements is true of the subsidiary with respect to the presentation of consolidated financial statement information?

• A) Pre-acquisition earnings are deducted from consolidated retained earnings.
• B) Pre-acquisition earnings are added to consolidated revenues and expenses.
• C) Pre-acquisition earnings are deducted from the beginning consolidated stockholders' equity.
• D) Pre-acquisition earnings are added to the beginning consolidated stockholders' equity.
• E) Pre-acquisition earnings are excluded from the consolidated income statement.

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Definitions:

Group Cohesion

The extent to which members of a group stick together and remain united in pursuit of common goals.

Negative Consequence

Undesirable outcomes resulting from an action or decision, often serving as a deterrent for certain behaviors.

Structural Factor

An underlying, often systemic element within a society or organization that influences behavior or outcomes in a significant way.

Employees' Skills

The specific abilities and expertise that workers bring to their job roles, contributing to the organization's success.