Poodle Company owns 80 percent of the common stock of Shepherd Inc. Poodle acquires some of Shepherd's bonds from an unrelated party for less than the carrying value on Shepherd's books and holds them as a long-term investment. For consolidated reporting purposes, how is the acquisition of Shepherd's bonds treated?
A. As a retirement of bonds.
B. As an increase in noncurrent assets.
C. As a decrease in the Bonds Payable account on Shepherd's books.
D. Everything related to the bonds is eliminated in the consolidation worksheet, and nothing related to the bonds appears in the consolidated financial statements.
Answer: A
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