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.