Parent Corporation Acquired Some of Its Subsidiary's Outstanding Bonds

question 92

Essay

Parent Corporation acquired some of its subsidiary's outstanding bonds. Why might Parent purchase the bonds, rather than the subsidiary buying its own bonds?

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Definitions:

Cost Allocated

The distribution of an indirect cost or group of costs to the various departments, projects, or products that benefit from those costs.

Support Department

An organizational unit that provides essential services, support, or resources that help other direct-function departments operate effectively.

Cost Allocation

The process of identifying, aggregating, and assigning costs to cost objects, such as departments, products, or projects, for budgeting, accounting, or costing purposes.

Reciprocal Services

The process in cost accounting where two or more departments provide services to each other and the costs of these services are allocated between them.