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

question 23

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 gain 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 gain on constructive retirement of debt,and decreased by the subsidiary's bond interest expense.

---

Definitions:

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting sold goods.

Operating Cash Flows

Cash generated from a company's normal business operations, indicating whether a company is able to generate sufficient positive cash flow to maintain and grow its operations.

Financially Healthy

Describes a state where an individual or organization is in good financial condition, with stable cash flow, manageable debt, and solid financial indicators.

Investing Cash Flows

Cash movements related to the purchase and sale of investments and long-term assets, reflecting a company's investment activities.