Davidson,Inc

question 18

Multiple Choice

Davidson,Inc.owns 70 percent of the outstanding voting stock of Ernest Company.On January 2,2007,Davidson sold 8 percent bonds payable with a $5,000,000 face value maturing January 2,2027 at a premium of $400,000.On January 1,2009,Ernest acquired 30 percent of these same bonds at 97.6.Both companies use the straight-line method of amortization.What adjustment should be made to Davidson's 2010 beginning Retained Earnings as a result of this bond acquisition?

• A)$114,000.
• B)$122,000.
• C)$136,000.
• D)$144,000.
• E)$152,000.

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Definitions:

Double-blind Experiment

A double-blind experiment is a research design in which both the participants and the experimenters are unaware of who is receiving the treatment or control, to prevent bias.

Statistically Significant

A determination that an observed effect is unlikely to have occurred by chance, based on a predetermined significance level.

Dependent Variable

The variable that is the subject’s response to, and dependent on, the level of the manipulated independent variable.

Internal Validity

The extent to which a study accurately demonstrates a cause-effect relationship by controlling for extraneous variables and bias.