Assume That Parent Inc

question 54

Multiple Choice

Assume that Parent Inc. purchased a controlling interest in Sub Inc. on August 1, 2018 and decides to prepare an Income Statement for the combined entity on the date of acquisition. If Parent acquired 100% of Sub Inc. on that date, what would be the net income reported for the combined entity (for the year ended July 31, 2018) ?

• A) $60,000
• B) $120,000
• C) $180,000
• D)Nil

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Definitions:

Entrepreneurial Firms

Companies that pursue opportunities, regardless of the resources they currently control, characterized by innovation, risk-taking, and proactiveness.

Investing Wisely

The process of allocating resources, typically money, in different financial instruments or assets with the aim of generating favorable returns while managing risks.

Flexible

The ability to adapt to changes and respond to varying needs and conditions with ease.

Succession Plan

A strategy for passing on leadership roles, often including the ownership of a company to an heir or successor.