The Net Incomes for Parent and Sub Inc for the Year

question 27

Multiple Choice

The Net Incomes for Parent and Sub Inc for the year ended July 31, 2012 were $120,000 and $60,000 respectively. If Parent Company purchased 80% of Sub Inc. for $180,000, the Liabilities section of Parent's Consolidated Balance Sheet on the date of acquisition (August 1, 2012) would total what amount under GAAP after January 1, 2011?

• A) $470,000
• B) $474,000
• C) $500,000
• D) $519,000

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Definitions:

Competency-Based Pay

A salary system that bases compensation on an employee's skills, abilities, and performance rather than job title or position alone.

Commission Pay

A form of compensation based on a percentage of sales or profits generated by an employee, commonly used in sales roles to motivate performance.

Profit Sharing

Any procedure by which an employer pays, or makes available to all regular employees, in addition to base pay, special current or deferred sums based on the profits of the enterprise

Job Classification System

A system of job evaluation in which jobs are classified and grouped according to a series of predetermined wage grades.