Master Corporation Owns 85 Percent of Servant Corporation's Voting Shares

question 14

Multiple Choice

Master Corporation owns 85 percent of Servant Corporation's voting shares. On January 1, 20X8, Master Corporation sold $200,000 par value 8 percent bonds to Servant for $245,000. The bonds mature in 10 years and pay interest semiannually on January 1 and July 1.
Based on the information given above, in the preparation of the 20X8 consolidated financial statements, premium on bonds payable will be:

• A) debited for $45,000 in the eliminating entries.
• B) credited for $40,500 in the eliminating entries.
• C) debited for $40,500 in the eliminating entries.
• D) credited for $45,000 in the eliminating entries.

---

Definitions:

Puberty

A developmental period marked by the onset of sexual maturity and physical growth in adolescence.

Secular Trend

A long-term trend observed over several generations or years, often pertaining to societal, physical, or behavioral changes.

Adulthood

The stage of life following adolescence, where an individual is considered legally and socially responsible and typically shows mature behavior.

Hurried Child

Refers to children pushed into behaving in ways that are socially or educationally advanced for their age, often leading to undue stress.