At the End of the Year,a Parent Acquires a Wholly

question 37

Multiple Choice

At the end of the year,a parent acquires a wholly owned subsidiary's bonds from unaffiliated parties at a cost less than the subsidiary's carrying value.The consolidated net income for the year of acquisition should include the parent's separate operating income plus:

• A)the subsidiary's net income increased by the gain on constructive retirement of debt.
• B)the subsidiary's net income decreased by the loss on constructive retirement of debt.
• C)the subsidiary's net income increased by the gain on constructive retirement of debt,and decreased by the subsidiary's bond interest expense.
• D)the subsidiary's net income decreased by the loss on constructive retirement of debt,and decreased by the subsidiary's bond interest expense.

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Definitions:

Strict Product Liability

A legal doctrine that holds sellers or manufacturers liable for defective products regardless of fault or intent, as long as the product was used as intended.

Manufacturer Actions

Refers to the measures or steps taken by a manufacturer in response to product design, production, marketing, and safety concerns.

Defective Condition

A state of imperfection or malfunction in a product that makes it hazardous or unfit for its intended use.

State-Of-The-Art Defense

A legal defense used in product liability cases where the defendant claims the product was using the best technology available at the time of design or manufacture.