41) Consolidated net income for a parent and its partially owned subsidiary would always be equal to:
A) the total of the parent company's net income plus the parent's share of the subsidiary's net income
B) the total of the parent company's net income plus the subsidiary's net income
C) the total of the parent company's net income plus the minority percentage of the subsidiary's net income
D) the total of the parent company's net income, the subsidiary's net income and the net income of the minority interest
42) The amortization of a discount on a long-term bond investment:
A) decreases the investor's Long-Term Investment account
B) decreases the investor's interest revenue
C) increases the investor's interest revenue
D) increases the investor's interest expense
43) Amortization of a discount or premium on the bond affects all of the following
except:
A) the carrying value of the bonds on the investor's books
B) retained earnings of the investor
C) the amount of cash received when interest payments are made
D) interest revenue of the investor
44) Long-term bond investments are reported on the balance sheet at their:
A) historical cost
B) amortized cost
C) current market value
D) lower of cost or market
45) When a premium on a bond investment is amortized by the company holding the investment:
A) the amount of cash received as an interest payment will be increased
B) the amount of cash received as an interest payment will be reduced
C) Interest Revenue will be debited
D) companies normally credit a separate account called Premium on Investments
46) Amortizing a discount on a long-term bond investment will cause:
A) the interest revenue reported on the income statement to exceed the cash received by the investor
B) the interest revenue reported on the income statement to equal the cash received by the investor
C) the cash received by the investor to exceed the interest revenue reported on the income statement
D) the interest revenue reported is not related to the cash received by the investor
47) Amortizing a discount on a bond investment will cause the Investment account and interest revenue to respectively:
A) decrease and increase
B) increase and decrease
C) increase and increase
D) decrease and decrease
48) Amortizing a premium on a bond investment will cause the Investment account and interest revenue to respectively:
A) increase and increase
B) decrease and decrease
C) decrease and increase
D) increase and decrease
49) On March 1, 2011, Uncontracted Capacity Company purchased $20,000 of Utility Service Corporation's 9% bonds at a purchase price of 90. Uncontracted Capacity Company, whose year end is December 31, expects to hold the bonds until their maturity date 5 years from the date of purchase. Interest on the bonds will be paid every March 1 and September 1 until maturity. Assuming the premium or discount is amortized every interest payment date using straight-line amortization, how much total interest revenue will be recorded by Uncontracted Capacity Company on September 1, 2011?
A) $800
B) $1,100
C) $900
D) $1,200
50) On April 1, 2010, Transportation Imbalance Company purchased $5,000 of 6% bonds as a long-term investment to be held to maturity. Transportation Imbalance's year end is December 31. Interest dates are April 1 and October 1. The bonds mature 36 months from the purchase date. The purchase price of the bonds was $5,120, and the premium is amortized on the straight-line basis. Assume the proper adjusting entry was made on December 31, 2010, to record accrued interest receivable and amortization of the premium. The total interest revenue recorded by Transportation Imbalance Company on April 1, 2011 will be:
A) $150.00
B) $72.50
C) $75.00
D) $65.00