Parent Corporation Acquired Some of Its Subsidiary's Bonds on the Open

question 6

Essay

Parent Corporation acquired some of its subsidiary's bonds on the open bond market. The remaining life of the bonds was eight years, and Parent expected to hold the bonds for the full eight years. How would the acquisition of the bonds affect the consolidation process?

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Definitions:

Trial Balance

A bookkeeping report that lists the balances in each general ledger account at a specific point in time, used to check the accuracy of bookkeeping entries.

Debit Column

The side of an accounting ledger where increases in assets, expenses, and withdrawals are recorded.

Credit Column

is a section in financial statements or ledgers where increases in liability, equity, and revenue accounts or decreases in asset and expense accounts are recorded.

Drawing Account

An account that tracks amounts withdrawn from a business by its owners for personal use, which reduces the owner's equity.