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A parent company acquires a subsidiary on January 1, 2017. The subsidiary's bonds payable (five-year remaining life) are undervalued by $5,000 at the date of acquisition. Straight-line amortize the premium/discount, and directly adjust bonds payable for premium/discount amortization.
-On the consolidation working paper prepared at December 31, 2020 (four years later) , eliminating entry (O) includes:
A) A credit to interest expense of $1,000.
B) A credit to bonds payable of $1,000.
C) A debit to bonds payable of $2,000.
D) A credit to bonds payable of $2,000.
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Q34: An acquisition requires revaluation of a subsidiary's
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