Company P Owns an 90% Interest in Company S

question 25

Multiple Choice

Company P owns an 90% interest in Company S. Company S has outstanding $100,000 of 10% bonds that were sold at face value and have 6 years to maturity as of the balance sheet date. Company P owns $70,000 of the bonds and has a remaining unamortized book value of $66,000. Company S bonds will be presented on the consolidated balance sheet as

• A)bonds payable, $30,000.
• B)bonds payable, $34,000.
• C)bonds payable, $100,000.
• D)bonds payable will not appear.

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Definitions:

Interest Rates

The cost of borrowing money or the reward for saving, usually expressed as a percentage of the amount borrowed or saved.

Inflationary Recessions

Occurs when the economy faces stagnation or contraction alongside rising inflation rates.

Aggregate Demand

The overall request for every good and service within an economic system at varying prices over a particular timeframe.

Monetary Policy

Actions of a central bank, currency board, or other regulatory authorities that determine the size and rate of growth of the money supply, which in turn affects interest rates.