Soren Corporation Is an 80% Owned Subsidiary of Passia Company

question 12

Multiple Choice

Soren Corporation is an 80% owned subsidiary of Passia Company. Soren purchased bonds of Passia Company for $103,000. Passia Company reported the bond liability on the date of purchase at $100,000 less unamortized discount of $5,000. Assuming that the constructive gain or loss is material, the consolidated income statement should report an:

• A) ordinary loss of $8,000.
• B) ordinary gain of $8,000.
• C) extraordinary loss of $8,000 adjusted for income tax effects.
• D) extraordinary gain of $8,000 adjusted for income tax effects.

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Definitions:

Learner

An individual who is acquiring knowledge or skill through study, experience, or being taught.

Delivering Shock

An experimental method often used in psychological research to study obedience or the impact of punishments on behavior.

Experiment

A research method in which an investigator manipulates one or more factors (independent variables) to observe the effect on some behavior or mental process (the dependent variable). By random assignment of participants, the experimenter aims to control other relevant factors.

Conformity

The act of adjusting one's behaviors or attitudes to align with the norms or standards of a group.