Fisher Company acquired 80% of the outstanding shares of Gibbs Company for $152 in cash.The net income was $100 and $20 for Fisher Company and Gibbs Company, respectively.None of the income resulted from intercompany sales.The net income on the consolidated income statement is_____.
A)$80
B)$96
C)$100
D)$116

Question

Quizplus · Accepted Answer

The consolidated net income includes 100% of Fisher's net income ($100) and 100% of Gibbs's net income ($20), totaling $120. However, since Fisher owns 80% of Gibbs, the non-controlling interest (20% of Gibbs's net income) must be subtracted. 20% of $20 is $4. Therefore, the consolidated net income is $120 - $4 = $116.

Fisher Company Acquired 80% of the Outstanding Shares of Gibbs