Final answer:
In the consolidation process, intra-entity bonds should be carried at their fair value in the consolidated financial statements.
Step-by-step explanation:
In the consolidation process, the intra-entity bonds acquired by Bennett Inc. from an outside party should be accounted for at their fair value in the consolidated financial statements. Option C is the correct answer.
When consolidating financial statements, bonds are typically carried at their fair value. This ensures that the consolidated financial statements reflect the true economic value of the intra-entity bonds. Book value (option B) and acquisition cost (option D) may not accurately represent the fair value of the bonds.
It is important to eliminate any intra-entity transactions or balances when consolidating financial statements, but in this case, the intra-entity bonds should be carried at their fair value.