Question

When consolidating a subsidiary that was acquired on a date other than the first day of the fiscal year, which of the following statements is true of the subsidiary with respect to the presentation of consolidated financial statement information?A. Preacquisition earnings are deducted from consolidated revenues and expenses.

B. Preacquisition earnings are added to consolidated revenues and expenses.
C. Preacquisition earnings are deducted from the beginning consolidated stockholders' equity.
D. Preacquisition earnings are added to the beginning consolidated stockholders' equity.
E. Preacquisition earnings are ignored in the consolidated income statement.

Answer 1

E. Preacquisition earnings are ignored in the consolidated income statement.

Step-by-step explanation:

This is the statement that is true about the presentation of a consolidated financial statement. A consolidated financial statement is a statement of an entity that has several divisions or subsidiaries. Therefore, this statement would aggregate the reporting of an entity structured with a parent company and subsidiaries.