Culver Owns 80 Percent of the Common Stock of Fowler

question 40

Multiple Choice

Culver owns 80 percent of the common stock of Fowler Company.Culver also purchases some of Fowler's bonds directly from Fowler and holds the bonds as a long-term investment.How is the acquisition of the bonds treated for consolidated reporting purposes?

• A) As a retirement of bonds.
• B) As an increase in the Bonds Payable account on Fowler's books.
• C) Everything related to the intercompany bonds is eliminated in the consolidation worksheet, and nothing related to the bonds appears in the consolidated financial statements.
• D) As an increase in noncurrent assets.