Light Corporation Owns 80 Percent of Sound Company's Voting Shares

question 20

Multiple Choice

Light Corporation owns 80 percent of Sound Company's voting shares. On January 1, 20X7, Sound sold bonds with a par value of $300,000 at 95. Light purchased two thirds of the bonds; the remainder was sold to nonaffiliates. The bonds mature in ten years and pay an annual interest rate of 6 percent. Interest is paid semiannually on January 1 and July 1.
-Based on the information given above,what amount of interest receivable will be recorded by Light Corporation on December 31,20X8,in its separate financial statements?

• A) $5,000
• B) $6,500
• C) $10,000
• D) $6,000

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Definitions:

Localized Markets

Areas where businesses sell products or services within a specific geographic region or demographic.

Herfindahl Index

A measure used to calculate the concentration of market power within an industry by summing the squares of the market shares held by each competitor.

Market Power

The ability of a firm or group of firms to influence or control the terms and conditions of the market to their advantage, often through controlling supply, manipulating prices, or creating barriers to entry.

Technologically Progressive

A characteristic of firms or economies that consistently adopt and implement new technologies, leading to growth and development.