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.