Company S Is a 100%-Owned Subsidiary of Company P

Multiple Choice

Company S is a 100%-owned subsidiary of Company P.Company P purchased, at a premium, Company S bonds that are outstanding and have a remaining discount.Consolidation theory takes the position that:

A) ​interest expense should be adjusted to reflect the market value of the bonds on the date of Company P's purchase.
B) ​the debt has been retired at a loss.
C) ​the debt is outstanding but should be shown at face value.
D) ​the gain or loss on retirement should be allocated over the remaining life of the bonds.