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:

Congressional Power

The authorities and duties given to the United States Congress, including making laws, declaring war, and regulating interstate and foreign commerce.

Partisanship

Strong loyalty to a particular political party or cause, often leading to unwillingness to consider alternative viewpoints.

Congressional Hearing

A formal meeting held by Congress to collect information and opinions on proposed legislation, conduct an investigation, or evaluate/oversee the implementation of laws and policies.

Congressional Investigation

The process by which either house or a committee of the United States Congress formally inquires into and investigates charges or allegations regarding misconduct or maladministration.