If newly issued debt is issued from a parent to its subsidiary, which of the following statements is false?
A) Any premium or discount on bonds payable is exactly offset by a premium or discount on bond investment.
B) There will be $0 net gain or loss on the bond transaction.
C) Interest expense needs to be eliminated on the consolidated income statement.
D) Interest revenue needs to be eliminated on the consolidated income statement.
E) A net gain or loss on the bond transaction will be reported.

Question

Quizplus · Accepted Answer

When a parent issues debt to its subsidiary, any premium or discount and interest revenue or expense are eliminated in consolidation, resulting in no net gain or loss being reported.

If Newly Issued Debt Is Issued from a Parent to Its