In the working paper elimination (in journal entry format) prepared on the date a parent company acquires outstanding bonds of its wholly owned subsidiary in the open market at a cost less than the subsidiary's carrying amount for the bonds, the difference between the subsidiary's carrying amount and the parent company's cost is:

Question

Quizplus · Accepted Answer

When a parent company acquires its subsidiary's bonds at a cost less than the subsidiary's carrying amount, the difference is credited to Gain on Extinguishment of Bonds-Subsidiary, reflecting the gain from acquiring the debt at a lower price.

In the Working Paper Elimination (In Journal Entry Format) Prepared