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) Any gain or loss is deferred on a consolidated income statement.
B) Any gain or loss is recognized on a consolidated income statement.
C) Interest revenue on the affiliated debt is recognized on a consolidated income statement.
D) Interest expense on the affiliated debt is recognized on a consolidated income statement.
E) Consolidated retained earnings is adjusted for the difference between the purchase price and the carrying value of the bonds.