Advanced Accounting (Canada) · 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?

Answer locked. Get the free KnowCard app to reveal it — plus spaced-repetition review so it actually sticks.

This is one card from the KnowCard library — thousands more across SAP, Linux, Python and more. In the app you get the answer, AI explanations, and cards that come back right before you would forget them. Free to start on iOS, Android or the web.

More in Intercompany Bondholdings

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?

Is there always a consolidated gain or loss when an affiliate buys the group's bonds? When does it correctly come out to zero?

Start learning today

Free to start — download the app or use it in your browser.