When Consolidating a Subsidiary That Was Acquired on a Date

question 98

Multiple Choice

When consolidating a subsidiary that was acquired on a date other than the first day of the fiscal year, which of the following statements is true of the subsidiary with respect to the presentation of consolidated financial statement information?

• A) Pre-acquisition earnings are deducted from consolidated revenues and expenses.
• B) Pre-acquisition earnings are added to consolidated revenues and expenses.
• C) Pre-acquisition earnings are deducted from the beginning consolidated stockholders' equity.
• D) Pre-acquisition earnings are added to the beginning consolidated stockholders' equity.
• E) Pre-acquisition earnings are ignored in the consolidated income statement.

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Definitions:

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, is able to elicit a conditioned response on its own.

UCS

stands for Unconditioned Stimulus, a term in classical conditioning that refers to a stimulus that elicits a natural, unconditioned response without prior learning.

CS

An acronym that stands for Conditioned Stimulus, a previously neutral stimulus that, after becoming associated with the unconditioned stimulus, eventually comes to trigger a conditioned response.

CS

Stands for Conditioned Stimulus, an initially neutral stimulus that, after being associated with an unconditioned stimulus, triggers a conditioned response.