Vontkins Inc

question 83

Multiple Choice

Vontkins Inc. owned all of Quasimota Co. The subsidiary had bonds payable outstanding on January 1, 2010, with a book value of $265,000. The parent acquired the bonds on that date for $288,000. Subsequently, Vontkins reported interest income of $25,000 in 2010 while Quasimota reported interest expense of $29,000. Consolidated financial statements were prepared for 2011. What adjustment would have been required for the retained earnings balance as of January 1, 2011?

• A) reduction of $27,000.
• B) reduction of $4,000.
• C) reduction of $19,000.
• D) reduction of $30,000.
• E) reduction of $20,000.

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Definitions:

Ownership Of Stocks

The holding of shares in a company, which represent a claim on the company's assets and earnings, providing an opportunity for investment returns.

Specific Sector

refers to a distinct part of the economy, focused on a particular type of activity or service, such as technology or healthcare.

Diverse Set

A collection comprising a wide variety of elements, often referring to different types, characteristics, or origins.

Random Walk Theory

The hypothesis that stock market prices evolve according to a random walk and, thus, the future movement of stock prices cannot be predicted.