The Net Incomes for Parent and Sub Inc for the Year

question 2

Multiple Choice

The Net Incomes for Parent and Sub Inc for the year ended July 31, 2012 were $120,000 and $60,000 respectively. Assume that Parent Inc. purchased a controlling interest in Sub Inc. on August 1, 2012 and decides to prepare an Income Statement for the combined entity on the date of acquisition. If Parent acquired 80% of Sub Inc. on that date, what would be the net income reported for the combined entity (for the year ended July 31, 2012) ?

• A) $104,000
• B) $120,000
• C) $130,000
• D) Nil

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Definitions:

Local Anaesthesia

A method of pain control that numbs a specific area of the body, preventing pain signals from reaching the brain during procedures.

Bowel Resection

A surgical procedure to remove part of the intestine due to conditions such as cancer, blockages, or inflammatory bowel disease.

Dry Mouth

Dry Mouth, also known as xerostomia, is a condition characterized by a lack of saliva production, leading to discomfort, difficulty in swallowing, and increased risk of dental problems.

Ice Chips

Small pieces of ice used either to soothe the mouth or to prevent dehydration in patients unable to drink water normally.