From a Consolidated Entity Point of View, the Constructive Gain

question 27

Multiple Choice

From a consolidated entity point of view, the constructive gain or loss on the open market purchase of a parent company's bonds by a subsidiary company is:

• A) considered realized at the date of the open market purchase.
• B) realized in future periods through discount and premium amortization on the books of the individual companies.
• C) realized only to the extent of the parent company's interest in the subsidiary.
• D) deferred and recognized in the consolidated income statement when the bonds are retired.

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