Hunter Corporation Holds 80 Percent of the Voting Shares of Moss

question 38

Multiple Choice

Hunter Corporation holds 80 percent of the voting shares of Moss Company. On January 1, 20X8, Moss purchased $100,000 par value 12 percent first mortgage bonds of Hunter from Cruse for $115,000. Hunter originally issued the bonds to Cruse on January 1, 20X6, for $110,000. The bonds have an 8-year maturity from the date of issue. Moss' reported net income of $65,000 for 20X8, and Hunter reported income (excluding income from ownership of Moss's stock) of $90,000.
Based on the information given above, what amount of consolidated net income should be reported for 20X8?

• A) $163,750
• B) $161,250
• C) $146,250
• D) $148,750

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Definitions:

Professional Corporation

A business structure legally recognized that allows licensed professionals, such as doctors or lawyers, to offer their services.

National Practitioner Data Bank

A U.S. database that contains information on medical malpractice payments, sanctions, and licensure actions against healthcare providers.

Health Care Quality Improvement Act

A federal statute enacted to improve the quality of medical care, largely by restricting the ability of physicians with a history of malpractice from moving to another state to escape their history.

Ordinary Care

The reasonable level of care, diligence, and judgment that a person in a particular profession is expected to exercise under specific circumstances.