On January 1, 2018, Riley Corp

question 43

Multiple Choice

On January 1, 2018, Riley Corp.acquired some of the outstanding bonds of one of its subsidiaries.The bonds had a carrying value of $421,620, and Riley paid $401,937 for them.How should you account for the difference between the carrying value and the purchase price in the consolidated financial statements for 2018?

• A) The difference is added to the carrying value of the debt.
• B) The difference is deducted from the carrying value of the debt.
• C) The difference is treated as a loss from the extinguishment of the debt.
• D) The difference is treated as a gain from the extinguishment of the debt.
• E) The difference does not influence the consolidated financial statements.

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