Find Corp and Has Elected to Use Proportionate Consolidation Method

question 5

Multiple Choice

Find Corp and has elected to use proportionate consolidation method to report its investment in Find Corp. for 2013. Both companies are subject to 40% tax rate. What is the amount of Consolidated Retained Earnings at December 31, 2013?

• A) $340,000
• B) $368,000
• C) $376,000
• D) $546,200

---

Definitions:

Asset Test

A financial ratio or test used to determine the ability of a company to meet its debt obligations by converting its assets into cash.

Operating Segments

Parts of an organization that engage in business activities from which they may earn revenues and incur expenses, including revenues and expenses related to transactions with other components of the same organization.

Reportable

Pertaining to information or data that must be officially reported or disclosed, typically in compliance with legal or regulatory requirements.

Revenue Test

A criterion used to assess the validity of a company's revenue recognition practices, ensuring reported income arises from core business activities.