Assume that the subsidiary purchased 30% of the parents bonds in the open market at a cost

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Assume that the subsidiary purchased 30% of the parent’s bonds in the open market at a cost in excess of the carrying amount of the bonds. Briefly explain whether this event will increase, decrease or not change the return on equity when preparing the consolidated financial statements for the year when this transaction occurred.

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Modern Advanced Accounting In Canada

ISBN: 9781260881295

10th Edition

Authors: Hilton Murray, Herauf Darrell

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