Gill Ltd Is the Wholly Owned Subsidiary of Basaraba Ltd

question 2

Multiple Choice

Gill Ltd. is the wholly owned subsidiary of Basaraba Ltd. Gill purchased all of Basaraba's outstanding bond issue on the open market at a discount. The bonds have an unamortized premium attached. This transaction, in effect, retires the bond and results in a gain. How should the gain be shown?

• A)It will appear on Basaraba's separate-entity statement of comprehensive income only.
• B)It will appear on both Basaraba's separate-entity and consolidated statements of comprehensive income.
• C)It will appear on Basaraba's consolidated statement of comprehensive income only.
• D)It will be added to the value of the bonds payable on Basaraba's statement of financial position.