on july 1 2006 phillips issued common stock for an additional 75 of sago rsquo s out 605564

Aug 29, 2021 | Uncategorized

On September 1, 2005, Phillips, Inc. issued common stock in exchange for 20% of Sago, Inc.’s outstanding common stock. On July 1, 2006, 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 2006 net income should be reported as accruing to Phillips?

  1. 20% of Sago’s net income to June 30 and all of Sago’s net income from July 1 to December 31.
  2. 20% of Sago’s net income to June 30 and 95% of Sago’s net income from July 1 to December 31.
  3. 95% of Sago’s net income.
  4. All of Sago’s net income.