Which of the Following Statements Is True Concerning the Acquisition

Multiple Choice

Which of the following statements is true concerning the acquisition of existing debt of a consolidated affiliate in the year of the debt acquisition?

A) Recognition of any gain or loss is deferred until the debt is extinguished for purposes of reporting such debt on consolidated financial statements.
B) Any gain or loss is recognized in the year of acquisition on a consolidated income statement.
C) Interest revenue generated from the debt of an affiliate is recognized on a consolidated income statement.
D) Interest expense recognized from carrying debt instruments is recognized on a consolidated income statement.
E) Consolidated retained earnings is adjusted to take into account the difference between the purchase price and carrying value of the debt.