If New Bonds Are Issued from a Parent to Its

question 30

Multiple Choice

If new bonds are issued from a parent to its subsidiary, which of the following statements is false?

• A) Any premium or discount on bonds payable is exactly offset by a premium or discount on bond investment.
• B) There will be $0 net gain or loss on the bond transaction.
• C) Interest expense needs to be eliminated on the consolidated income statement.
• D) Interest revenue needs to be eliminated on the consolidated income statement.
• E) A net gain or loss on the bond transaction will be reported.

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Definitions:

Structural Model

A representation that outlines the arrangement and connectivity of components within a system or theory.

Iceberg Model

A metaphor used in psychology and other fields to illustrate that only a small part of a person's mind or situation is visible, while the majority is hidden beneath the surface.

Libido

A term used in psychoanalytic theory to denote the energy associated with sexual drives and desires.

Oedipus Complex

A Freudian theory that suggests a child's unconscious sexual desire for the opposite-sex parent and jealousy toward the same-sex parent.