When one member of a business combination loans money to another
the resulting receivable/payable accounts and the interest income/expense balances are identical and can be directly offset in the consolidation process
when an affiliate's debt instrument is acquired by an outside party, the difference in acquisition price and BV of the liability creates a gain or loss. Where is this gain or loss recorded?
Not recorded within the individual records of either company
Recognized in consolidation process
when an affiliate's debt instrument is acquired by an outside party, why will the interest income of the buyer not equal the interest expense of the debtor?
amortization of any associated discounts and/or premiums
Consolidation entry B (intra-entity debt transactions) NEEDS MORE INFORMATION
Dr. Bond payable (FV of bonds purchased)
Dr. Premium on Bond Payable
Dr. Interest Income
Cr. Investment in Bonds
Cr. Interest expense
Cr. Extraordinary Gain on Retirement of bonds