Company S Is a 100%-Owned Subsidiary of Company P

question 26

Multiple Choice

Company S is a 100%-owned subsidiary of Company P. On January 1, 20X9, Company S has $200,000 of 8% face rate bonds outstanding, which were issued at face value. The bonds had 5 years to maturity on January 1, 20X9. Premiums or discounts would be amortized on a straight-line basis. On that date, Company P purchased the bonds for $198,000. The amount on the consolidated balance sheet relative to the debt is:

• A)bonds payable $200,000.
• B)bonds payable $200,000, discount $2,000.
• C)bonds payable $200,000, discount $1,600.
• D)The bonds do not appear on the consolidated balance sheet.