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发帖数: 48 | 1 Answer for this question :In an acquisition, the net income of a newly
acquired subsidiary is 95% .
I think why not 100% because in the acquisition, all is at 100% of FV ,
right? Thank you!
48. CPA-00421
On September 1, 1990, Phillips, Inc. issued common stock in exchange for 20%
of Sago, Inc.'s outstanding common stock. On July 1, 1992, Phillips issued
common stock for an additional 75% of Sago's outstanding common stock. Sago
continues in existence as Phillips' subsidiary. How much of Sago's 1992 net
income should be reported as accruing to Phillips?
a. 20% of Sago's net income to June 30 and all of Sago's net income from
July 1
to December 31.
b. 20% of Sago's net income to June 30 and 95% of Sago's net income from
July 1
to December 31.
c. 95% of Sago's net income.
d. All of Sago's net income.
Choice "b" is correct, 20% of Sago's net income to June 30 and 95% of Sago's
net income from July 1 to December 31.
Rule: In an acquisition, the net income of a newly acquired subsidiary will
only be included in consolidated net income from the date of acquisition.
Therefore, only 20% of Sago net income is included in consolidated earnings
until June 30 and 95% thereafter |
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