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

question 9

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, 2012, at par. Interest is paid on January 1 and July 1 of each year; the bonds mature on January 1, 2017. On January 2, 2014, 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 2014 included the annual interest expense for all 3,000 bonds. Scrawn's separate net income for 2014 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 2,2014?

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

---

Definitions:

Echolalia

The repetition of phrases or words typically practiced by individuals with autism or other communication disorders.

Morphemes

The smallest grammatical units in a language that convey meaning, such as prefixes, root words, and suffixes.

Mental Abilities

The capacity to process information, acquire knowledge, and apply reasoning and problem-solving skills.

Babbling

The production of repetitive syllables by infants, an early stage in language acquisition.