Basaraba Ltd

Basaraba Ltd. owns 75% of the outstanding common shares of Gill Ltd. Gill purchased all of Basaraba's outstanding bond issue on the open market at a discount. The bonds have an unamortized premium attached. This transaction, in effect, retires the bond and results in a gain. Under the par-value approach to dealing with a gain on elimination of intercompany bond holdings, which of the following statements is true?

A) The gain is allocated all to the purchaser.
B) The gain is allocated all to the issuer.
C) The gain is allocated to both the purchaser and issuer as though they do not have any affiliation with each other.
D) The gain is eliminated on consolidation.