Which of the Following Statements Is True Concerning the Acquisition

question 63

Multiple Choice

Which of the following statements is true concerning the acquisition of existing debt of a consolidated affiliate in the year of the debt acquisition?

• A) Recognition of any gain or loss is deferred until the debt is extinguished for purposes of reporting such debt on consolidated financial statements.
• B) Any gain or loss is recognized in the year of acquisition on a consolidated income statement.
• C) Interest revenue generated from the debt of an affiliate is recognized on a consolidated income statement.
• D) Interest expense recognized from carrying debt instruments is recognized on a consolidated income statement.
• E) Consolidated retained earnings is adjusted to take into account the difference between the purchase price and carrying value of the debt.

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Definitions:

Need for Competence

The desire to interact effectively with the environment, to master tasks, and to achieve proficiency.

Need for Achievement

A psychological trait that drives an individual to pursue and attain goals.

Intrinsic Motivation

Motivation driven by an interest or enjoyment in the task itself, and exists within the individual rather than relying on any external pressure.

Need for Competence

An individual's innate desire to be effective in dealing with the environment, feeling capable, and skilled.