Company S Is a 100%-Owned Subsidiary of Company P

question 27

Multiple Choice

Company S is a 100%-owned subsidiary of Company P. On January 1, 20X9, Company S has $200,000 of 8% face rate bonds outstanding, which were issued at face value. The bonds had 5 years to maturity on January 1, 20X9. Premiums or discounts would be amortized on a straight-line basis. On that date, Company P purchased the bonds for $198,000. The amount on the consolidated balance sheet relative to the debt is:

• A) bonds payable $200,000.
• B) bonds payable $200,000, discount $2,000.
• C) bonds payable $200,000, discount $1,600.
• D) The bonds do not appear on the balance sheet.

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Definitions:

Normal Distribution

A bell-shaped curve that represents the spread of a variable in a way that most occurrences take place around the central peak and the probabilities for values further away from the mean taper off equally in both directions.

Standard Deviations

A measure of the amount of variation or dispersion of a set of values relative to the mean.

Crystallized Intelligence

The ability to use learned knowledge and experience effectively.

Primary Mental Abilities

Fundamental skills and cognitive functions such as reasoning, memory, and perception that are considered essential for intelligence.