One company purchases the outstanding debt instruments of an affiliated company on the open market. This transaction

Question:

One company purchases the outstanding debt instruments of an affiliated company on the open market. This transaction creates a gain that is appropriately recognized in the consolidated of that year. Thereafter, a worksheet adjustment is required to correct the beginning balance of the consolidated Retained Earnings. Why is the amount of this adjustment reduced from year to year?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...