A subsidiary has a debt outstanding that was originally issued at a discount. At the beginning of the current year, the parent company acquired the debt at a slight premium from outside parties. Which of the following statements is true?

Question

A) Whether the balances agree or not, bot the subsequent interest income and interest expense should be reported in a consolidate income statement.
B) The interest income and interest expense will agree in amount and should be offset for consolidation purposes.
C) In computing any non controlling interest allocation, the interest income should be included but not the interest expense.
D) Although subsequent interest income and interest expense will not agree in amount, both balances should be eliminated for consolidation purposes.

Answer 1

Answer: D) Although subsequent interest income and interest expense will not agree in amount, both balances should be eliminated for consolidation purposes.