A Corporation had net income of $50,000 in 2019 and $60,000 in 2020, excluding any income from its investment in B Company. B Company had net income of $30,000 in 2019 and $40,000 in 2020. On January 1, 2020, A Corporation acquired all of the outstanding common shares of B Company for a cash payment of $300,000. Assume that there was no acquisition differential on this business combination. What net income would A Corporation report for 2020 in its comparative consolidated financial statements at the end of 2020?
A) $40,000
B) $60,000
C) $80,000
D) $100,000

Question

Quizplus · Accepted Answer

A Corporation would report a net income of $100,000 for 2020 in its comparative consolidated financial statements. This includes its own net income of $60,000 plus the net income of B Company ($40,000) after the acquisition date, totaling $100,000.

A Corporation Had Net Income of $50,000 in 2019 and $60,000