1/ An affiliated company (i.e., Parent) purchases bonds from outside parties. The bonds were originally issued by another member of the consolidated group (i.e., Subsidiary). Elimination procedures are: a. not needed except in the period of acquisition if only a portion of the outstanding bonds are purchased b. needed each period as long as there are intercompany bonds c. not needed except in the period of acquisition if purchased at a premium or discount d. not needed except in the period of acquisition if purchased at par 2/ In 2020, the parent company purchased bonds (issued by the subsidiary) from outside parties. In subsequent years (2021 and after), the consolidated income statements: a. recognize a prorated share of any gain but would not show a share of a loss from intercompany bonds b. recognize a prorated share of any loss but would not show a share of a gain from intercompany bonds c. would not recognize any gain or loss from intercompany bonds. d. recognize a prorated share of any gain or loss from intercompany bonds.
1/ An affiliated company (i.e., Parent) purchases bonds from outside parties. The bonds were originally issued by another member of the consolidated group (i.e., Subsidiary). Elimination procedures are: a. not needed except in the period of acquisition if only a portion of the outstanding bonds are purchased b. needed each period as long as there are intercompany bonds c. not needed except in the period of acquisition if purchased at a premium or discount d. not needed except in the period of acquisition if purchased at par 2/ In 2020, the parent company purchased bonds (issued by the subsidiary) from outside parties. In subsequent years (2021 and after), the consolidated income statements: a. recognize a prorated share of any gain but would not show a share of a loss from intercompany bonds b. recognize a prorated share of any loss but would not show a share of a gain from intercompany bonds c. would not recognize any gain or loss from intercompany bonds. d. recognize a prorated share of any gain or loss from intercompany bonds.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 17E
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1/ An affiliated company (i.e., Parent) purchases bonds from outside parties. The bonds were originally issued by another member of the consolidated group (i.e., Subsidiary). Elimination procedures are:
a. not needed except in the period of acquisition if only a portion of the outstanding bonds are purchased
b. needed each period as long as there are intercompany bonds
c. not needed except in the period of acquisition if purchased at a premium or discount
d. not needed except in the period of acquisition if purchased at par
2/
In 2020, the parent company purchased bonds (issued by the subsidiary) from outside parties. In subsequent years (2021 and after), the consolidated income statements:
a. recognize a prorated share of any gain but would not show a share of a loss from intercompany bonds
b. recognize a prorated share of any loss but would not show a share of a gain from intercompany bonds
c. would not recognize any gain or loss from intercompany bonds.
d. recognize a prorated share of any gain or loss from intercompany bonds.
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