Which of the following is not a characteristic of a constructive retirement of b

Question

Which of the following is not a characteristic of a constructive retirement of bonds from an intercompany bond transaction?

a. Bonds are retired for consolidated statement purposes only.

b. The reciprocal intercompany bond investment and liability amounts are eliminated in the consolidation process.

c. Any gain or loss from the intercompany bond transaction is recognized on the books of the issuer.

d. For consolidated statement purposes, the gain or loss on the constructive retirement of bonds is the difference between the book value of the bond liability and the purchase price of the bond investment.

Explanation / Answer

d. For consolidated statement purposes, the gain or loss on the constructive retirement of bonds is the difference between the book value of the bond liability and the purchase price of the bond investment.

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