Question

Purple, Inc., a domestic corporation, owns 100% of Blue, Ltd., a foreign corporation and Yellow, Inc., a domestic corporation. Purple also owns 40% of Green, a domestic corporation. Purple receives no distributions from any of these corporations. Which of these entities' net income is included in Purple's GAAP income statement for current-year financial reporting purposes?

a.Purple, Blue, and Yellow.
b.Purple, Yellow, and Green.
c.Purple, Blue, Yellow, and Green.
d.Purple, Blue, and Green.

Answer 1

Answer: a.Purple, Blue, and Yellow.

Explanation: he does not have a controlling interest in green yet because it's percentage of control is still below 50% so it cannot report green's income.