A parent acquires the outstanding bonds of a subsidiary company directly from an outside third… 1 answer below »

A parent acquires the outstanding bonds of a subsidiary company directly from an outside third party. For consolidation purposes, this transaction creates a gain of $45,000. Should this gain be allocated to the parent or the subsidiary? Why? A subsidiary has (1) a convertible preferred stock and (2) a convertible bond. How are these items factored into the computation of earnings per share for the parent company?

 

 

 

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