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

question 30

Multiple Choice

Company S is a 100%-owned subsidiary of Company P.Company P purchased all the outstanding bonds of Company S at a discount.The bonds had a remaining issuance premium at the time of Company P's purchase.The bonds have 5 years to maturity.At the end of 5 years, consolidated retained earnings:

• A)​is greater as a result of the purchase.
• B)​is less as a result of the purchase.
• C)​is not affected by the purchase.
• D)​cannot be determined from the information provided.

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Definitions:

Production Machinery

Production machinery encompasses the mechanical devices and equipment used in the manufacturing process to produce goods.

Capacity Management

The practice of planning and controlling the resources of an organization or system to ensure optimal performance.

Product Flexibility

The ability of a company to modify its products to meet customer preferences or market demands.

Workforce Schedule

The planning of working hours and assignments for employees to ensure operational efficiency.