A parent company buys bonds on the open market that had been previously issued by its subsidiary. The price paid by the parent is less than the carrying amount of the bonds on the subsidiary’s records. How should the parent report the difference between the price paid and the carrying amount of the bonds on its consolidated financial statements?a. As a loss on retirement of the bonds.b. As a gain on retirement of the bonds.c. As an increase to interest expense over the remaining life of the bonds.d. Because the bonds now represent intra-entity debt, the difference is not reported.

Q: One company purchases the outstanding debt instruments of an affiliated company on the open market.…

A:

Q: On an income distribution schedule, any gain or loss resulting from intercompany bonds is charged to…

A: Bonds are tradable assets issued by business entities as debt instruments. The holders of the bonds…

Q: The motivation of a parent company to purchase the outstanding bonds of a subsidiary could be to:…

A: Lets understand the basics. Parent company and subsidiary company generally enters into transaction…

Q: 5. A gain or loss may arise from which of the following? a. The initial recognition of the debt and…

A: Following is the answer to the given question

Q: 1/ An affiliated company (i.e., Parent) purchases bonds from outside parties. The bonds were…

A: Reasons 1/ Elimination procedures for intercompany bonds purchased from an outsider party, issued by…

Q: Which of the following is not a valid statement regarding bonds payable?    a. Bonds issued by an…

A: Solution: "The amortization of a bond premium increases both the recorded interest expense and…

Q: When a company redeems bonds at a premium to carrying value, that activity is usually classified as:…

A: The company issued the bonds to raise funds in the company so that that funds can be utilized in the…

Q: When convertible debt is retired by the issuer, any material difference between the cash acquisition…

A: The convertible debts are those which can be converted into liquidity at any point of time. The…

Q: ntercompany debt that must be eliminated from consolidated financial statements may result from:…

A: Intercompany debts are eliminated from the consolidated financial statements.  Intercompany…

Q: A parent company buys bonds on the open market that had been previously issued by its subsidiary.…

A: Answer:   Option b:

Q: Bailey Enterprises purchased bonds on the open market at a discount. The company intends to hold the…

A: Amortized cost accounting involves recording the initial cost of the bonds and then adjusting the…

Q: In case of payment of convertible bonds, the balance of Share Premium - Conversion Privilege account…

A: A bond is a fixed pay instrument issued to represents to an advance made by a financial specialist…

Q: Boss Co. purchased bonds at a discount in the open market as an investment. The bonds will be held…

A: SOLUTION-4 AMORTIZED COST-  IT IS THAT ACCUMULATED PORTION OF THE RECORD COST OF A FIXED ASSET THAT…

Q: When a company exercises its call provision on bonds, the company pays the book value of the bonds…

A: Call provision on the bond is the option held by the issuer for redeeming back the bonds if in case…

Q: 1 a. Describe intercompany bonds. b. Explain how to eliminate intercompany bonds on the company’s…

A: Eliminating entries: In consolidation of financial statements, all account balances arising from…

Q: A parent company acquires from a third party bonds that had been issued originally by one of its…

A: The bonds which are purchased from the third party will be eliminated from the consolidated records…

Q: ABC Company acquired bonds for their par value between the date of interest collection. Accrued…

A: Accrued interest: Accrued interest is the outstanding interest expense in the accounting period, as…

Q: unamortized premium

A: Any unamortized premium should be reported on the balance sheet of the issuing corporation as Answer…

Q: What is a noncontrolling interest? Select one: A. A component of debt representing amounts owed to a…

A: When a company holds less than 50% stake in another company then that part of holding is known as…

Q: When the conversion of bonds payable to common stock is recorded under the market value method and…

A: Journal entry will be - bonds payable debit…

Q: A parent company acquires from a third party bonds that had been issued originally by one of its…

A: If the bonds had been acquired directly from the subsidiary than from a third party then the debt…

Q: A parent business purchases bonds on the open market that had previously been issued by a subsidiary…

A: The answer:

Q: :A dicount on bonds payable .Occurs when a corporation issues bonds with a stated rate more than the…

A: A discount on bonds payable is a contra liability account which represents unamortized discount on…

Q: The share premium recognized on a convertible bond O A. remains in equity only if the bonds are…

A: SOLUTION- SHARE PREMIUM  IS THE CREDITED DIFFERENCE IN THE PRICE BETWEEN THE PAR VALUE OR FACE VALUE…

Q: T or F - Zero-interest bonds sell at a significant discount that provides an investor with a total…

A: Zero coupon bonds means those bonds which were issued for money or any assets but for which no…

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.