Presented below is the balance sheet of Hal Company at January 1,2015: The balance sheet of Monty Company at January 1,2015 is below:
On January 1,2015,Monty Company acquired 100 percent of the outstanding common stock of Hal Company for $260 cash.The net income for the year ending December 31,2015 was $30 for Hal Company.The net income for the year ending December 31,2015 was $40 for Monty Company.There were no intercompany sales.What is the net income on the consolidated income statement for the year ended December 31,2015?
A)$0
B)$30
C)$40
D)$70

Question

Presented below is the balance sheet of Hal Company at January 1,2015:   The balance sheet of Monty Company at January 1,2015 is below:
  On January 1,2015,Monty Company acquired 100 percent of the outstanding common stock of Hal Company for $260 cash.The net income for the year ending December 31,2015 was $30 for Hal Company.The net income for the year ending December 31,2015 was $40 for Monty Company.There were no intercompany sales.What is the net income on the consolidated income statement for the year ended December 31,2015?
A)$0 
B)$30 
C)$40 
D)$70

Quizplus · Accepted Answer

Since Monty Company has acquired 100% of Hal Company, it needs to prepare a consolidated financial statement. The consolidated net income for the year ending December 31, 2015 will include the individual net income of both companies. The net income of Hal Company was $30 and the net income of Monty Company was $40. Therefore, the consolidated net income will be $70 ($30 + $40). Option D is the correct choice.

Presented Below Is the Balance Sheet of Hal Company at January