A subsidiary has a debt outstanding that was originally issued at a discount. At the beginning of
Question:
A subsidiary has a debt outstanding that was originally issued at a discount. At the beginning of the current year, the parent company acquired the debt at a slight premium from outside parties. Which of the following statements is true?
a. Whether the balances agree or not, both the subsequent interest income and interest expense should be reported in a consolidated income statement.
b. The interest income and interest expense will agree in amount and should be offset for consolidation purposes.
c. In computing any noncontrolling interest allocation, the interest income should be included but not the interest expense.
d. Although subsequent interest income and interest expense will not agree in amount, both balances should be eliminated for consolidation purposes.
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