Question

In 2017, Palmyra Corp. purchased 100% of the common stock of Rochester Tech for a total purchase price of $8,906.8 million. On Palmyra’s unconsolidated accounts, it uses the equity method to account for Rochester Tech. For public disclosure, Palmyra Corp. consolidates the accounts of Rochester Tech. Which of the following is true? Select one:
A. The consolidated shareholders' equity exceeds the unconsolidated shareholders' equity by $8,906.8 million.
B. The consolidated total assets are greater than the unconsolidated total assets by $8,906.8 million.
C. Net income is the same on the consolidated and unconsolidated financial statements.
D. The consolidated net income is greater than the unconsolidated net income.
E. None of the above

Answer 1

Answer and Explanation:

The correct answer is option C

C. Net income is the same on the consolidated and unconsolidated financial statements.