Question

A loss on the constructive retirement of a parent's bonds by a subsidiary is effectively recognized in the individual accounting records of the parent and its subsidiary:_________

I.at the date of constructive retirement
II.over the remaining term of the bonds.

a. I
b. II
c. Both I and II
d. Neither I nor II

Answer 1

c. Both I and II

Step-by-step explanation:

In the case when there is a loss at the time of the retirement of the parent bond by a subsidiary and it could be effectively recorded in the accounting records of the parent and the subsidiary. It could be done at that date when the retirement is done in a constructive way also the bond terms that are left

Therefore both options should be recognized

Hence, the correct option is c.