At the end of the year, a parent acquires a wholly owned subsidiary’s bonds from unaffiliated parties at a cost less than the subsidiary’s carrying
At the end of the year, a parent acquires a wholly owned subsidiary’s bonds from unaffiliated parties at a cost less than the subsidiary’s carrying value. The consolidated net income for the year of acquisition should include the parent’s separate operating income plus:
-the subsidiary’s net income increased by the gain on constructive retirement of debt.
-the subsidiary’s net income decreased by the loss on constructive retirement of debt.
-the subsidiary’s net income increased by the gain on constructive retirement of debt, and decreased by the subsidiary’s bond interest expense.
-the subsidiary’s net income decreased by the loss on constructive retirement of debt, and decreased by the subsidiary’s bond interest expense.
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