Bilson Ltd

Multiple Choice

Bilson Ltd. is the wholly-owned subsidiary of Lawson Ltd. Bilson purchased all of Lawson's outstanding bond issue on the open market at a discount. The bonds have an unamortized premium attached. This transaction, in effect, retires the bond and results in a gain. How should the gain be shown?

A) It will appear on both Lawson's separate-entity and consolidated statements of comprehensive income.
B) It will appear on Lawson's consolidated statement of comprehensive income only.
C) It will be added to the value of the bonds payable on Lawson's statement of financial position.
D) It will appear on Lawson's separate-entity statement of comprehensive income only.