Question
A subsidiary issues bonds directly to its parent at a discount. Both use the same amortization method. Which of the following statements is true? A,
A subsidiary issues bonds directly to its parent at a discount. Both use the same amortization method. Which of the following statements is true?
A, Since the bond was issued by the subsidiary, the amount for non-controlling interest must be affected.
B, Because of the discount, the bond interest accounts on the two sets of financial statements will not agree.
C, Bond interest income and expense will be equal in amount and must be eliminated when preparing the consolidated income statement.
D, Elimination is not necessary for consolidation purposes because the bond was acquired directly from the subsidiary.
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