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A member of a consolidated group may sell its bond directly to another member of the group. This would result in an intercompany debt that

A member of a consolidated group may sell its bond directly to another member of the group. This would result in an intercompany debt that must be eliminated from the consolidated statements. Another avenue is for the parent to purchase the subsidiary bonds from outside parties and hold the bonds as an investment.

Using the above information discuss the ramifications the purchase of intercompany bonds would have when consolidating under the two options described above.

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