Company S Is a 100%-Owned Subsidiary of Company P

question 32

Multiple Choice

Company S is a 100%-owned subsidiary of Company P.On January 1, 2016, Company S has $100,000 of 8% face rate bonds outstanding.The bonds had 5 years to maturity on January 1, 2016, and had an unamortized discount of $5,000.On that date, Company P purchased the bonds for $99,000.The net adjustment needed to consolidate retained earnings on December 31, 2016 is ____.

• A)​$(4,000)
• B)​$(3,200)
• C)​$(800)
• D)​$0

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Definitions:

Probability

The measure of the likelihood that an event will occur, quantified as a number between 0 and 1, where 1 indicates certainty.

Insurance

A financial product that provides protection against financial losses from various risks like accidents, illnesses, or property damage.

Guaranteed Income

A system of social welfare provision that guarantees that all citizens or families have an income sufficient to live on, provided they meet certain conditions.

Expected Total Utility

The sum of satisfaction or benefit that a consumer anticipates receiving from consuming different quantities of goods and services.