A Subsidiary Has Outstanding $100,000 of 8% Bonds That Were

Multiple Choice

A subsidiary has outstanding $100,000 of 8% bonds that were issued at face value.The parent purchased all the bonds for $96,000 with 5 years remaining to maturity.How will the parent's use of the effective interest amortization rather than straight-line amortization of the discount affect the consolidated financial statements?

A) ​The consolidated financial statements report the same information whether the parent uses straight-line or effective interest amortization on its investment in sub's bonds.
B) ​Will result in a different gain on retirement
C) ​Will result in more interest expense in the first year after the intercompany purchase.
D) ​Will result in less interest expense in the first year after the intercompany purchase.