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

question 18

Multiple Choice

Use the following information to answer the question(s) below.
Pascalian Company owns a 90% interest in Sapp Company.On January 1,2013,Pascalian had $300,000,6% bonds outstanding with an unamortized premium of $9,000.The bonds mature on December 31,2017.Sapp acquired one-third of Pascalian's bonds in the open market for $97,000 on January 1,2013.Both companies use straight-line amortization of bond discounts/premiums.Interest is paid on December 31.On December 31,2013,the books of the two affiliates held the following balances:
-Prussia Corporation owns 80% the voting stock of Stad Corporation.On January 1,2013,Prussia paid $391,000 cash for $400,000 par of Stad's 10% $1,000,000 par value outstanding bonds,due on April 1,2018.Stad's bonds had a book value of $1,045,000 on January 1,2013.Straight-line amortization is used.The gain or loss on the constructive retirement of $400,000 of Stad bonds on January 1,2013 was reported in the 2013 consolidated income statement in the amount of

• A)$14,000.
• B)$21,600.
• C)$23,000.
• D)$27,000.

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Definitions:

Horizontal Analysis

A financial analysis method that compares historical financial data over a series of periods to identify trends and growth patterns.

Increase Or Decrease

Terms that refer to the change in size, amount, or number of something, often used to describe financial and numerical data fluctuations.

Income Statement

This is a financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and net income.

Comparative Form

A grammatical construction used in many languages to compare two items or states, often formed by modifying adjectives or adverbs.