The Following Data Pertains to Questions

question 11

Multiple Choice

The following data pertains to questions
Parent and Sub Inc had the following balance sheets on July 31,2007: The Net Incomes for Parent and Sub Inc for the year ended July 31,2007 were $120,000 and $60,000 respectively.
-Assume that Parent Inc.decides to prepare an Income Statement for the combined entity on the date of acquisition.Assuming that Parent acquires 100% of Sub Inc.on that date,what would be the net income reported for the combined entity?

• A)$180,000
• B)$120,000
• C)$ 60,000
• D)Nil

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Definitions:

Scienter Misrepresentation

A false representation made knowingly, without belief in its truth, or recklessly without caring whether it is true or false.

Unilateral Mistake

An error made by one party during the formation of a contract that may affect the enforceability or terms of the agreement.

Mistake Of Fact

A misunderstanding of a fact that is material to a contract, which can render the agreement voidable if the mistake is mutual between both parties.

Legal Assent

The agreement or consent to the terms of a contract, recognizing that all parties understand and accept the conditions as legally binding.