Parent Z owns 75% of Sub QQQ. On January 1 2015, Parent Z issued 20 year notes, with face value $50,00,000,000 and a premium of 1,000,000. The premium is amortized at a rate of $50,000 per year. The debt was issued to a third party who resold it to Sub QQQ for $50,000,000 at the start of 2019. During 2019, Parent Z reported interest expense of $2,290,000 associated with this debt, and Sub QQQ reported interest income of $2,345,000 from this bond. How should this bond be reported on the consolidated financials? At year-end, the consolidated entity will recognize a (choose either gain or loss) [a] of amount [b] related to the constructive retirement of the debt. The consolidated income statement interest income must be (choose either increased or decreased) [c] by amount [d] and interest income will be (choose either decreased or increased) [e] by [f].

Answer rating: 100% (QA)

Reporting in the consolidated Balance Sheet Reporting of Bonds Payable in consolidated balance sheet ... View the full answer