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) $100
C) $96
D) $116

Question

Quizplus · Accepted Answer

The consolidated net income includes the net income of the parent company (Fisher) and the net income of the subsidiary (Gibbs) attributable to the parent. Since Fisher owns 80% of Gibbs, 80% of Gibbs' net income ($20) is added to Fisher's net income ($100), resulting in $116.

Fisher Company Acquired 80% of the Outstanding Shares of Gibbs