Question

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 is included in Create's income statement for current-year financial reporting purposes?
a.Create, Vinyl, and Digital.
b.Create, Digital, and Record.
c.Create, Vinyl, Digital, and Record.
d.Create, Vinyl, and Record.

Answer 1

Answer:

c.Create, Vinyl, Digital, and Record

Explanation:

The answer is

c.Create, Vinyl, Digital, and Record

Since Create Inc. which is a domestic corporation, owns 100% shares in two enterprises. One is Vinyl Ltd. which is a foreign corporation and the other is Digital Inc. which is a domestic corporation. And Create Inc. also happens to own 12% shares in a domestic corporation named Record Inc.

Now since Create Inc. owns shares in all the three corporations, all these corporations's net income will be included in the Create's income statement current-year financial report.

Thus the answer is

c.Create, Vinyl, Digital, and Record