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

question 37

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

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Definitions:

Preconventional

The first level in Kohlberg's stages of moral development, where moral reasoning is based on external consequences or personal benefit.

Intuitive Thought

A thinking process that relies on instinctive feeling rather than conscious reasoning, often used in making quick decisions.

Deductive Reasoning

An intellectual procedure where an inference is made based on the congruence of many premises assumed valid.

Concrete Reasoning

A form of thinking that relies on physical objects and specific examples to understand concepts, characteristics of early childhood cognitive development.