Advanced Accounting (Canada) · Intercompany Bondholdings

Consolidation recognizes the whole bond-retirement gain now, but the affiliates won't record it (or be taxed on it) until later years as they amortize. What consolidation adjustment reconciles this, and why?

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More in Intercompany Bondholdings

A bond-retirement gain hits the consolidated income statement in the purchase year. In every later year until maturity, what unusual thing happens to the interest elimination, and why doesn't the gain reappear?

Does switching from straight-line to effective-interest amortization change the total consolidated bond gain or loss, or only its yearly pattern?

An affiliate buys the group's entire bond issue on the very last day of the year. Whose interest figures for that year count as intercompany, and whose don't?

After one affiliate buys all of the group's bonds, what figure appears for those bonds payable on the consolidated balance sheet — and what changes if only part of the issue was reacquired?

An affiliate buys the group's outstanding bonds for cash. What price relative to the liability's carrying amount produces a consolidated gain rather than a loss?

An affiliate buys only 60% of another affiliate's bond issue. How much of the issue is constructively retired, and what is the error if you treat the whole issue?

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