Safire Corp

question 41

Multiple Choice

Safire Corp.recently acquired $500,000 of the bonds of Regency Co. ,one of its subsidiaries,paying more than the carrying value of the bonds.According to the most practical view of this intercompany transaction,to whom would the loss be attributed?

• A)To Regency because the bonds were issued by Regency.
• B)The loss should be allocated between Safire and Regency based on the purchase price and the original face value of the debt.
• C)The loss should be amortized over the life of the bonds and need not be attributed to either party.
• D)The loss should be deferred until it can be determined to whom the attribution can be made.
• E)To Safire because Safire is the controlling party in the business combination.

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