When Consolidating a Subsidiary That Was Acquired on a Date

question 14

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 in the presentation of consolidated financial statements?

• A)Purchased pre-acquisition earnings are deducted from combined revenues and expenses
• B)Purchased pre-acquisition earnings are added to combined revenues and expenses
• C)Purchased pre-acquisition earnings are deducted from the beginning consolidated stockholders' equity
• D)Purchased pre-acquisition earnings are added to the beginning consolidated stockholders' equity
• E)Purchased pre-acquisition earnings are ignored on the consolidated income statement

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Definitions:

Bond Yields

The amount of return an investor realizes on a bond, usually expressed as a percentage of the bond's value.

Present Value

The present worth of a future sum of money or series of cash flows, when discounted at a specific rate of interest.

Coupon Payment

The interest payment made to the bondholders by the issuer of the bond.

Term to Maturity

Term to Maturity is the remaining time until a debt instrument, such as a bond, reaches its due date and the principal must be repaid.