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.

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Definitions:

Health Insurance

A type of insurance coverage that pays for an individual's medical and surgical expenses.

Efficient Market

A market in which prices fully reflect available information, allowing for optimal allocation of resources.

Positive Statement

An objective statement that can be tested, amended, or rejected by referring to the available evidence.

Insurance Benefits

Insurance benefits are payments made by an insurance company to the insured or a designated beneficiary under the terms of an insurance policy.