Question
Parent owns 70% of subsidiary. Subsidiary has bonds payable to third parties with a book value of $6,000,000., net of unamortized premium. In 2020, parent
Parent owns 70% of subsidiary. Subsidiary has bonds payable to third parties with a book value of $6,000,000., net of unamortized premium. In 2020, parent decides to purchase all outstanding bonds from third parties for $6,400,000. What result is reported in the 2020 consolidated financial statements.
| a. | Consolidated loss on "retirement" of bonds of $280,000 | |
| b. | Consolidated loss on "retirement" of bonds $400,000 | |
| c. | Consolidated gain on "retirement" of bonds of $400,000 | |
| d. | No gain or loss is reported in the consolidated totals | |
| e. | Consolidated gain on "retirement" of bonds of $280,000 |
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
