The Accounting Problems Encountered in Consolidated Intra-Entity Debt Transactions When

question 112

Multiple Choice

The accounting problems encountered in consolidated intra-entity debt transactions when the debt is acquired by an affiliate from an outside party include all of the following except:

• A) Both the investment and debt accounts have to be eliminated now and for each future consolidated financial statement despite containing differing balances.
• B) Subsequent interest revenue/expense must be removed although these balances fail to agree in amount.
• C) A gain or loss must be recognized by both parent and subsidiary companies.
• D) Changes in the investment, debt, interest revenue, and interest expense accounts occur constantly because of the amortization process.
• E) The gain or loss on the retirement of the debt must be recognized by the business combination in the year the debt is acquired, even though this balance does not appear on the financial records of either company.

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Definitions:

Family Burden

The emotional, financial, and physical demands and stressors placed on family members by the illness or disability of another family member.

Death Rates

Statistical measures of the number of deaths per unit of population within a specified time frame, often used in public health and demography.

Heart Disease

A range of conditions affecting the heart, including blood vessel diseases, heart rhythm problems, and heart defects among others.

Cancer

A disease characterized by the uncontrolled division of abnormal cells in a part of the body.