Chase Company Owns 80% of Lawrence Company and 40% of Ross

question 25

Multiple Choice

Chase Company owns 80% of Lawrence Company and 40% of Ross Company. Lawrence Company also owns 30% of Ross Company. Separate company net incomes for 2021 of Chase, Lawrence, and Ross are $450,000, $300,000, and $250,000, respectively. Each company also defers a $20,000 intra-entity gain in its current income figures. Excess annual amortization expense of $15,000 is assigned to Chase's investment in Lawrence and another $15,000 is assigned to Lawrence's investment in Ross.Compute Chase's accrual-based net income for 2021.

• A) $746,000.
• B) $719,000.
• C) $779,600.
• D) $774,200.
• E) $758,100.

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Definitions:

Bond Price

The market value of a bond, which fluctuates based on interest rates, the bond's credit quality, and other factors.

Par Value Bond

A par value bond is a bond that is issued at its face value, and the amount that is paid back to the bondholder at maturity.

Coupon Rate

The interest rate stated on a bond when it's issued, which represents the annual interest payment made to bondholders.

Modified Duration

A measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, adjusted for the bond's yield.