Parent CoPurchases 100 Percent of Son Company on January 1,20X1,when Parent's

question 22

Multiple Choice

Parent Co.purchases 100 percent of Son Company on January 1,20X1,when Parent's retained earnings balance is $520,000 and Son's is $150,000.During 20X1,Son reports $15,000 of net income and declares $6,000 of dividends.Parent reports $105,000 of separate operating earnings plus $15,000 of equity-method income from its 100 percent interest in Son;Parent declares dividends of $40,000.
-Based on the preceding information,what is the consolidated retained earnings balance on December 31,20X1?

• A)$470,000
• B)$585,000
• C)$600,000
• D)$759,000

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Definitions:

Taxable Income

Income subject to tax, after accounting for deductions and exemptions, used to determine how much tax an individual or corporation owes.

Performance Measurement Systems

Tools and methodologies used to assess and monitor the performance of individuals, teams, and organizations against set goals and objectives.

Company's Goals

The objectives set by the management or stakeholders of a company outlining the intended direction and desired outcomes over a certain period.

Operating Income

The profit generated from a company's everyday business operations, excluding income from investments and extraordinary items.