Final answer:
The statement is false; a constructive loss on retirement of debt occurs when the reacquired price is above, not below, the book value. Thus, acquiring debt for less than its book value typically leads to a gain.
Step-by-step explanation:
The statement that a constructive loss on retirement of debt occurs if the price paid by an affiliate to acquire the debt of another is less than the book value of the debt is False. A constructive loss would actually occur if the reacquired price exceeds the net carrying amount of the debt. When the acquisition price is less than the book value, this usually results in a gain upon the retirement of the debt, not a loss. In financial accounting, this situation is treated as an extinguishment of debt which can lead to recognizing gains or losses depending on whether the debt is settled for more or less than its carrying amount on the balance sheet.