
Introduction:
Affiliate bonds purchased from non-affiliate: The consolidated entity, on the acquisition of an affiliate’s bond from non-affiliates, retires it at the time of purchase. The acquisition of an affiliate’s bonds by another company within the consolidated entity is referred to as constructive retirement.
Under constructive retirement, the gain or loss on retirement are shown in the consolidated income statement for the period, but not reported in the consolidated
To choose: The correct answer to determine gain or loss on retirement of bonds to be reported in 20X6 consolidated income statement.

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Chapter 8 Solutions
Advanced Financial Accounting
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