REFERENCE: Ref.07_11 Delta Corporation Owns 90 Percent of Sigma Company,and Sigma Owns

question 71

Multiple Choice

REFERENCE: Ref.07_11
Delta Corporation owns 90 percent of Sigma Company,and Sigma owns 90 percent of Pi,Inc. ,all of which are domestic corporations.Information for the three companies for the year ending December 31,2009 follows:

-What is Sigma's accrual-based income for 2009?

• A)$400,000.
• B)$592,000.
• C)$540,000.
• D)$572,800.
• E)$600,000.

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Definitions:

Debt Financing

A method of funding in which a company raises capital by borrowing funds, typically through loans or issuing bonds.

Equity Financing

The process of raising capital through the sale of shares in a company, effectively exchanging ownership interests for funds.

Secondary Markets

Financial markets where previously issued securities and financial instruments such as stock, bonds, options, and futures are bought and sold.

Call Provisions

Call provisions are clauses in bond contracts that allow the issuer the option to repay the bond before its maturity date under specific conditions.