On January 1, 2018, Riley Corp

question 43

Multiple Choice

On January 1, 2018, Riley Corp.acquired some of the outstanding bonds of one of its subsidiaries.The bonds had a carrying value of $421,620, and Riley paid $401,937 for them.How should you account for the difference between the carrying value and the purchase price in the consolidated financial statements for 2018?

• A) The difference is added to the carrying value of the debt.
• B) The difference is deducted from the carrying value of the debt.
• C) The difference is treated as a loss from the extinguishment of the debt.
• D) The difference is treated as a gain from the extinguishment of the debt.
• E) The difference does not influence the consolidated financial statements.

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Definitions:

Bank Reconciliation

The process of matching and comparing figures from the accounting records against those presented on a bank statement to ensure consistency.

Adjusted Balance

The ending balance of an account after adjustments have been made for transactions, charges, or credits.

Bank Reconciliation

The process of matching and comparing figures from accounting records against those presented on a bank statement to ensure accuracy and consistency.

Internal Control

Policies and procedures implemented by a firm to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.