Which of the Following Statements Is True Concerning the Acquisition

question 95

Multiple Choice

Which of the following statements is true concerning the acquisition of existing debt of a consolidated affiliate in the year of the debt acquisition?

• A) Any gain or loss is deferred on a consolidated income statement.
• B) Any gain or loss is recognized on a consolidated income statement.
• C) Interest revenue on the affiliated debt is recognized on a consolidated income statement.
• D) Interest expense on the affiliated debt is recognized on a consolidated income statement.
• E) Consolidated retained earnings is adjusted for the difference between the purchase price and the carrying value of the bonds.

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Definitions:

Standard of Living

The degree of wealth and material comfort available to a person or community, measured by factors such as income, quality of housing, and access to services.

Rural Areas

Regions characterized by low population density and vast open spaces, often dominated by agricultural work and less developed infrastructure.

World-Class Industrial Power

Refers to a nation or state that possesses dominant, highly developed, and advanced industrial capabilities, impacting the global economy significantly.

Industrial Development

The process of increasing the economic productivity and manufacturing capabilities of a nation or region, often through strategic investments and policies.