If an affiliate purchases bonds in the open market,the book value of the intercompany bond liability at the time of purchase is

Question

Quizplus · Accepted Answer

The book value of the intercompany bond liability would be the par value of the bonds less the unamortized discount or plus the unamortized premium, depending on whether the bonds were purchased at a discount or premium. The book value is not necessarily assigned to the parent company because the affiliate purchased the bonds in the open market. Choice A and C can be eliminated based on this reasoning. Choice D is also incorrect as it lists the unamortized discount or premium before the par value, which is not the correct order. Therefore, the best choice is B.

If an Affiliate Purchases Bonds in the Open Market,the Book