Parent and Sub Inc On January 1, 2020, Parent Purchased All of Sub Inc

question 6

Multiple Choice

Parent and Sub Inc. had the following balance sheets on December 31, 2019: $\begin{array}{|l|r|r|}\hline & \text { Parent } & \text { Sub } \\\hline \text { Current Assets } & \$ 60,000 & \$ 10,000 \\\hline \text { Fixed Assets (net) } & \$ 100,000 & \$ 60,000 \\\hline \text { Total Assets } & \$ 160,000 & \$ 70,000 \\\hline \text { Current Liabilities } & \$ 42,000 & \$ 35,000 \\\hline \text { Bonds Payable } & \$ 20,000 & \$ 12,000 \\\hline \text { Common Shares } & \$ 90,000 & \$ 12,000 \\\hline \text { Retained Earnings } & \$ 8,000 & \$ 11,000 \\\hline \text { Total Liabilities and Equity } & \$ 160,000 & \$ 70,000 \\\hline\end{array}$ On January 1, 2020, 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:

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Expenditures dedicated to research and development activities, aimed at developing new products, services, or processes or improving existing ones.

Revenue Growth

The increase in a company's sales and income over time.

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The process by which workers, through their unions, negotiate contracts with their employers to determine their terms of employment.

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A workplace where employees are not required to join the union in order to be hired but must join shortly thereafter and remain members as a condition of employment.