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

question 22

Multiple Choice

Use the following information to answer the question(s) below.
Plenty Corporation issued six thousand,$1,000 par,6% bonds on January 1,2010,at par.Interest is paid on January 1 and July 1 of each year;the bonds mature on January 1,2015.On January 2,2012,Scrawn Corporation,a 75%-owned subsidiary of Plenty,purchased 3,000 of the bonds on the open market at 102.50.Plenty's separate net income for 2012 included the annual interest expense for all 3,000 bonds.Scrawn's separate net income for 2012 was $400,000,which included the bond interest received on July 1 as well as the accrual of bond interest revenue earned on December 31.Both companies use straight-line amortization of bond discounts/premiums.
-What was the amount of gain or (loss) from the intercompany purchase of Plenty's bonds on January 2,2012?

• A)$(56,250)
• B)$(75,000)
• C)$ 75,000
• D)$ 56,250

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Definitions:

Physical Capabilities

The extent of a person's physical strength, endurance, flexibility, and overall ability to perform activities or tasks.

Sensory Acuity

The ability of the sensory systems to accurately detect and process stimuli.

Analogy

A comparison between two things that are similar in some respects, often used to explain or clarify a concept or a process.

Nerve Transmission

The process by which nerve cells (neurons) communicate with each other or with muscles, sending signals throughout the body.