The Accounting Problems Encountered in Consolidated Intra-Entity Debt Transactions When

question 112

Multiple Choice

The accounting problems encountered in consolidated intra-entity debt transactions when the debt is acquired by an affiliate from an outside party include all of the following except:

• A) Both the investment and debt accounts have to be eliminated now and for each future consolidated financial statement despite containing differing balances.
• B) Subsequent interest revenue/expense must be removed although these balances fail to agree in amount.
• C) A gain or loss must be recognized by both parent and subsidiary companies.
• D) Changes in the investment, debt, interest revenue, and interest expense accounts occur constantly because of the amortization process.
• E) The gain or loss on the retirement of the debt must be recognized by the business combination in the year the debt is acquired, even though this balance does not appear on the financial records of either company.

---

Definitions:

Nurse Practitioners

Advanced practice registered nurses who have additional education and training in a specialty area, such as family practice or pediatrics.

Product Demand

The desire for a specific good or service supported by the capacity and willingness to purchase it at a given price.

Labor Demand

Labor demand refers to the quantity of labor that employers are willing and able to hire at a given wage rate in a given market.

Price of Paper

The cost at which paper is sold or bought in the market.