Question: On September 1, 2010, Phillips, Inc. issued common stock in exchange for 20% of Sago, Inc.s outstanding common stock. On July 1, 2011, Phillips issued

On September 1, 2010, Phillips, Inc. issued common stock in exchange for 20% of Sago, Inc.’s outstanding common stock. On July 1, 2011, Phillips issued common stock for an additional 75% of Sago’s outstanding common stock.

Sago continues in existence as Phillips’ subsidiary. How much of Sago’s 2011 net income should be reported as attributable to Phillips?

a. 20% of Sago’s net income to June 30 and all of Sago’s net income from July 1 to December 31.

b. 20% of Sago’s net income to June 30 and 95% of Sago’s net income from July 1 to December 31.

c. 95% of Sago’s net income.

d. All of Sago’s net income.

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