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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