Company S Is a 100%-Owned Subsidiary of Company P

Company S is a 100%-owned subsidiary of Company P.Company S has outstanding 8%, 10-year bonds sold to yield 7%.On January 1 of the current year, Company P purchased all of the Company S outstanding bonds at a price that reflected the current 9% effective interest rate.How should this event be reflected in the current year's consolidated statements?

A) ​The bonds remain in the balance sheet and are accounted for at a 7% effective rate.
B) ​The bonds remain in the balance sheet and are accounted for at a 9% effective rate.
C) ​Retirement of the bonds at a gain as of the purchase date.
D) ​Retirement of the bonds at a loss as of the purchase date.