A gain or loss generally is realized if a parent company acquires outstanding bonds of the subsidiary in the open market at an amount that differs from the carrying amount of the bonds in the subsidiary's accounting records.

Question

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When a parent company acquires a subsidiary's bonds at a price different from the carrying amount, it results in a gain or loss due to the difference between the purchase price and the carrying value of the bonds.

A Gain or Loss Generally Is Realized If a Parent