Use the Following Information to Answer the Question(s)below

question 16

Multiple Choice

Use the following information to answer the question(s) below.
On January 1,2011,Pardy Corporation acquired a 70% interest in the common stock of Salter Corporation for $7,000,000 when Salter's stockholders' equity was as follows:
There were no preferred dividends in arrears on January 1,2011.There are no book value/fair value differentials.
-Assume Salter's net income for 2011 is $220,000.No dividends are declared or paid in 2011.What is the change in Pardy's Investment in Salter for the year ending December 31,2011?

• A)$ 84,000
• B)$119,000
• C)$154,000
• D)$189,000

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Definitions:

Corporate Bonds

Debt securities issued by corporations to finance their operations, projects, or expansion, which pay interest to investors until maturity, at which point the principal amount is repaid.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, accounts payable and inventories, and meeting other short-term liabilities.

Trade Credit

A type of commercial financing where a customer is allowed to purchase goods or services and pay the supplier at a later scheduled date.

Operating Plan

A detailed document outlining the day-to-day operations required to run a business, including production, staffing, and inventory management processes.