For Gains on Intercompany Bond Holdings, Which Method of Allocating

question 3

Multiple Choice

For gains on intercompany bond holdings, which method of allocating the gain emphasizes substance over form?

• A)Allocating the gain to the parent company as the parent company has ultimate control
• B)Allocating the gain to the bond purchasing company as the bonds will be retired under consolidation
• C)Allocating the gain to the bond issuing company under the agency approach
• D)Allocating the gain between the issuing and purchasing companies under the par-value approach

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