Elimination procedures for intercompany bonds purchased from outside parties by another member of the consolidated group are:

Question

Quizplus · Accepted Answer

Elimination procedures are needed each period as long as the intercompany investment in bonds exists, regardless of whether they were purchased at par, premium or discount or if only a portion of the outstanding bonds were purchased. This is because the intercompany bond represents an intercompany transaction and should be eliminated to avoid double-counting it in the consolidated financial statements.

Elimination Procedures for Intercompany Bonds Purchased from Outside Parties by Another