Parent and Sub Inc

question 47

Multiple Choice

Parent and Sub Inc. had the following balance sheets on December 31, 2012: On January 1, 2013 Parent purchased all of Sub Inc.'s Common Shares for $40,000 in cash. On that date, Sub's Current Assets and Fixed Assets were worth $26,000 and $54,000, respectively. Assuming that Consolidated Financial Statements were prepared on that date, answer the following: The Shareholders' Equity section of the Consolidated Balance Sheet would show what amount?

• A) $19,000.
• B) $90,000.
• C) $98,000.
• D) $121,000.

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Definitions:

Negotiations

A process where two or more parties aim to reach a mutual agreement on matters of common interest.

Labor Union

An organization of workers formed to protect and advance their rights and interests through collective bargaining with employers.

American

Relating to or characteristic of the United States of America, its inhabitants, or their culture.

Wage System

The method or structure of paying laborers and employees for their work, often based on hours worked, productivity, or roles.