Company S Is a 100%-Owned Subsidiary of Company P

question 26

Multiple Choice

Company S is a 100%-owned subsidiary of Company P. On January 1, 20X9, Company S has $200,000 of 8% face rate bonds outstanding, which were issued at face value. The bonds had 5 years to maturity on January 1, 20X9. Premiums or discounts would be amortized on a straight-line basis. On that date, Company P purchased the bonds for $198,000. The amount on the consolidated balance sheet relative to the debt is:

• A)bonds payable $200,000.
• B)bonds payable $200,000, discount $2,000.
• C)bonds payable $200,000, discount $1,600.
• D)The bonds do not appear on the consolidated balance sheet.

---

Definitions:

Environmental Trends

Patterns and changes in the natural and built environment that impact business practices and consumer behaviors, such as climate change and sustainability concerns.

Laissez-Faire Policy

An economic policy promoting minimal governmental intervention in the private sector, allowing businesses to operate freely.

Digital Advertising Revenue

Income generated by businesses from online advertising, including display ads, search engine marketing, and social media.

Population Explosion

A rapid increase in the size of a population caused by such factors as a sudden decline in infant mortality or an increase in life expectancy.