When Consolidating a Subsidiary That Was Acquired on a Date

question 75

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

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Definitions:

Fetus

An unborn offspring in its later stages of development, especially after it has assumed the recognizable form of its species.

Second Trimester

The middle period of pregnancy, often considered from the 13th to the 26th week.

Edema

Swelling caused by excessive fluid accumulation in body tissues, often seen in limbs, abdomen, or facial areas.

Miscarriage

The spontaneous expulsion of the fetus from the uterus before 20 weeks of pregnancy. Also referred to as pregnancy loss or spontaneous abortion.