A Parent Issues One Thousand $100 Bonds at an Interest

question 40

Multiple Choice

A parent issues one thousand $100 bonds at an interest rate of 5% and its wholly owned subsidiary acquires half of the bond issue. These transactions result in:

• A)Intragroup borrowings result in transactions being recorded as assets of one member of the group and a recording as liabilities of the other member only.
• B)Intragroup interest payments require entries in revenues of one member of the group and expenses in the other member of the group only.
• C)Intragroup borrowing and intragroup interest payments result in both assets and revenues being recorded in one member of the group and liabilities and expenses being recorded in the other member's books.
• D)These transactions need only be noted in the notes to the financial statements.

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Definitions:

Freud

Sigmund Freud, an Austrian neurologist who founded the discipline of psychoanalysis.

MMPI

Minnesota Multiphasic Personality Inventory, a comprehensive standardized test used to assess and diagnose mental health disorders and personality structure.

Raven's Progressive Matrices

A nonverbal group test typically used to measure abstract reasoning and considered a good estimation of fluid intelligence.

Personality

The combination of characteristics or qualities that form an individual's distinctive character, often studied in psychology to understand differences in behavior and mental processes.