Search Company Is a 90% Owned Subsidiary of Passage Company

question 36

Multiple Choice

Search Company is a 90% owned subsidiary of Passage Company.On January 1, 2013, Search Company purchased for $680,000 bonds of Passage Company that had a carrying value of $725,000 (par value $700,000) .The bonds mature on December 31, 2014.Both companies use the straight-line method of amortization and have a December 31 year-end.The increase in 2013 consolidated income (i.e., income before subtracting noncontrolling interest) is

• A)$45,000.
• B)$44,000.
• C)$54,000.
• D)$36,000.
• E)$46,000.

---

Definitions:

Imports

Goods and services brought into a country from abroad for sale.

Trade Deficit

It occurs when a country's imports exceed its exports over a certain period, leading to more money leaving the country than entering it.

High Tariffs

Elevated taxes imposed on imported goods to protect domestic industries by making foreign products more expensive compared to local products.

Trade Deficit

A situation where a country's imports exceed its exports during a specific time period, indicating a negative balance of trade.