The Net Incomes for Parent and Sub Inc for the Year

question 23

Multiple Choice

The Net Incomes for Parent and Sub Inc for the year ended July 31, 2012 were $120,000 and $60,000 respectively. Assuming Parent purchased 80% of Sub Inc. for $180,000; the Assets section of Parent's Consolidated Balance Sheet on the date of acquisition (August 1, 2012) would total what amount under the Entity Method?

• A) $552,000
• B) $639,200
• C) $651,000
• D) $659,000

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Definitions:

Dichotomous Thinking

A cognitive distortion involving seeing things in black and white, or all-or-nothing terms, lacking shades of gray.

Overgeneralization

A cognitive distortion where a person draws broad, generalized conclusions from a single or few incidents, often leading to negative thinking and outcomes.

REBT

Rational Emotive Behavior Therapy, a form of psychotherapy that focuses on identifying and changing irrational beliefs that cause emotional distress.

Irrational Mistake

An error in thinking or belief that is not based on logic or rational judgment.