Paper Corporation Holds 80 Percent of the Voting Shares of Scissor

question 34

Multiple Choice

Paper Corporation holds 80 percent of the voting shares of Scissor Company.On January 1,20X8,Scissor purchased $100,000 par value 12 percent first mortgage bonds of Paper from Cruse for $115,000.Paper originally issued the bonds to Cruse on January 1,20X6,for $110,000.The bonds have an 8-year maturity from the date of issue.Scissor's reported net income of $65,000 for 20X8,and Paper reported income (excluding income from ownership of Scissor's stock) of $90,000.
-Based on the information given above,what amount of consolidated net income should be reported for 20X8?

• A)$163,750
• B)$161,250
• C)$146,250
• D)$148,750

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Definitions:

Written Document

A formal piece of writing that records information, transactions, or agreements, and is used as evidence or reference.

Offeror

The party in a contract who proposes the terms of an agreement to another party, awaiting acceptance or rejection.

Intent

The determination to perform a particular act or to act in a particular manner for a specific reason.

Contract

A legally binding agreement between two or more parties that outlines the terms and conditions of an arrangement.