The Purchase of Outstanding Subsidiary Bonds by the Parent Company

question 46

Multiple Choice

The purchase of outstanding subsidiary bonds by the parent company has the same impact on consolidated statements as:​

• A)​the subsidiary retiring its own debt with the proceeds of new debt issued to outside parties.
• B)​the subsidiary retiring the debt with the proceeds of a loan from the parent.
• C)​the subsidiary retiring the debt with the proceeds of a new stock issue.
• D)​allowing the bonds to continue to be held by outside interests.

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Definitions:

Marginal Benefit

The additional satisfaction or utility gained from receiving one more unit of a good or service.

Society's Well-Being

The overall level of happiness, health, and economic prosperity experienced by a community or society.

Total Benefit

The complete gain or satisfaction obtained from consuming a good, service, or undertaking a particular action.

Football Tickets

Tickets that grant admission to watch a football game.