Create, Inc., a domestic corporation, owns 100% of Vinyl, Ltd., a foreign corporation and Digital, Inc., a domestic corporation. Create also owns 12% of Record, Inc., a domestic corporation. Create receives no distributions from any of these corporations. Which of these entities' net income are included in Create's income statement for current year financial reporting purposes?
A)Create, Vinyl, and Digital.
B)Create, Vinyl, and Record.
C)Create, Digital, and Record.
D)Create, Vinyl, Digital, and Record.

Question

Quizplus · Accepted Answer

Create, Inc. will include its own net income and the net income of its wholly-owned subsidiaries, Vinyl, Ltd. and Digital, Inc., in its income statement for financial reporting purposes. The 12% ownership in Record, Inc. does not require consolidation, so its net income is not included.