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

question 5

Multiple Choice

Use the following information to answer the question(s) below.
Plenty Corporation issued six thousand,$1,000 par,6% bonds on January 1,2010,at par.Interest is paid on January 1 and July 1 of each year;the bonds mature on January 1,2015.On January 2,2012,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 2012 included the annual interest expense for all 3,000 bonds.Scrawn's separate net income for 2012 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 2,2013 at 98,the gain or (loss) from the intercompany purchase was

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

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Definitions:

Turnover

is the rate at which employees leave a company and are replaced by new employees over a certain period, reflecting the organization's stability and employee satisfaction.

Motivational Strength

The intensity of an individual's drive or desire to pursue goals or perform tasks.

Effort-performance Probability

The perceived likelihood that one's effort will lead to successful performance in a task or role.

Expectancy Model

A psychological theory stating that individual motivation to engage in an activity is influenced by the expected outcome and the personal importance of that outcome.