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

question 2

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.

-If the bonds were originally issued at 106,and 80% of them were purchased by Scrawn on January 2,2015 at 98,the gain or (loss) from the intercompany purchase was

• A)$(384,000).
• B)$(211,200).
• C)$ 211,200.
• D)$ 384,000.

---

Definitions:

Morphemes

The smallest grammatical units in a language that have meaning or grammatical function.

Syntax

The set of rules, principles, and processes that govern the structure of sentences in any given language, including the arrangement of words and phrases.

Semantics

The study of meaning in language, including how words and sentences represent particular ideas and objects.

Phonemes

The smallest unit of sound in a language that can distinguish one word from another in that language.