Regency Corp

question 68

Multiple Choice

Regency Corp. recently acquired $500,000 of the bonds of Safire Co., one of its subsidiaries, paying more than the carrying value of the bonds. According to the most practical view of this intra-entity transaction, to whom should the loss be attributed?

• A) To Safire because the bonds were issued by Safire.
• B) The loss should be allocated between Safire and Regency based on the purchase price and the original face value of the debt.
• C) The loss should be amortized over the life of the bonds and need not be attributed to either party.
• D) The loss should be deferred until it can be determined to whom the attribution can be made.
• E) To Regency because Regency is the controlling party in the business combination.

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Definitions:

Scientific Management

A management theory developed by Frederick W. Taylor, emphasizing efficiency, systematic planning, and standardized procedures.

Telephone Sales

A method of direct marketing in which salespeople use telephone calls to contact prospective customers and sell products or services.

Rationality

The quality of being based on or in accordance with reason or logic, often guiding decision-making processes.

Planning And Efficiency

The process of organizing activities in a way that maximizes productivity and minimizes waste or unnecessary effort.