A is corrent. Combined financial statements are financial statements prepared for companies that are owned by the same parent company or other owner. Combined financial statements are prepared by simply combining the subsidiaries’ financial statement classifications, with appropriate elimination of intercompany transactions, balances, and profit (loss). Thompson and Jenkins had no intercompany ownership or transactions during year 2, so combined net income is computed simply by adding the separate net incomes of the two companies ($100,000 + $200,000 = $300,000).
B is incorrect. Combined financial statements are prepared by simply combining the subsidiaries’ financial statement classifications, with appropriate elimination of intercompany transactions, balances, and profit (loss).
B is incorrect. Combined financial statements are prepared by simply combining the subsidiaries’ financial statement classifications, with appropriate elimination of intercompany transactions, balances, and profit (loss).
D is incorrect. Combined financial statements are prepared by simply combining the subsidiaries’ financial statement classifications, with appropriate elimination of intercompany transactions, balances, and profit (loss).
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