Franklin Corporation Owns 90 Percent of the Outstanding Voting Stock

question 102

Multiple Choice

Franklin Corporation owns 90 percent of the outstanding voting stock of Georgia Company. On January 2, 2011, Georgia sold 7 percent bonds payable with a $5,000,000 face value maturing January 2, 2031 at a premium of $500,000. On January 1, 2013, Franklin acquired 20 percent of these same bonds on the open market at 97.66. Both companies use the straight-line method of amortization. What adjustment should be made to Franklin's 2014 beginning Retained Earnings as a result of this bond acquisition?

• A) $107,100.
• B) $113,400.
• C) $119,700.
• D) $144,000.
• E) $152,000.

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Definitions:

Counterconditioning

A behavior therapy technique where an unwanted response to a stimulus is replaced with a desired response.

Unconditional Positive Regard

In psychology, an attitude of total acceptance and support towards another person regardless of what they say or do, often used within therapeutic settings.

Psychoanalysis

A therapeutic technique and theory of psychology developed by Sigmund Freud, focusing on unconscious motives and conflicts.

Unfalsifiable Nature

A characteristic of a statement, hypothesis, or theory that cannot be proven false, often due to its broad or vague nature.