A Corporation Had Net Income of $50,000 in 2019 and $60,000

question 51

Multiple Choice

A Corporation had net income of $50,000 in 2019 and $60,000 in 2020, excluding any income from its investment in B Company. B Company had net income of $30,000 in 2019 and $40,000 in 2020. On January 1, 2020, A Corporation acquired all of the outstanding common shares of B Company for a cash payment of $300,000. Assume that there was no acquisition differential on this business combination. What net income would A Corporation report for 2019 in its comparative consolidated financial statements at the end of 2020?

• A) $30,000
• B) $50,000
• C) $80,000
• D) $100,000

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Definitions:

Interest Expense

This refers to the cost incurred by an entity for borrowed funds over a specific period of time.

Accrued Interest

Interest that has been earned but not yet received or recorded.

Accrued Interest

Represents the interest that has accumulated over a period of time but has not yet been paid.