Cutler Company owns 80 percent of the common stock of Marina Inc. Cutler acquires some of Marina’s bonds from an unrelated party for less than the carrying value on Marina’s books and holds and holds them as a long-term investment. For consolidated reporting purposes, how is the acquisition of Marina’s bonds treated?
A. As a decrease in the Bonds Payable account on Marina’s books.
B. As an increase in noncurrent assets.
C. Everything related to the bonds is eliminated in the consolidation workpaper, and nothing related to the bonds appears in the consolidated financial statements.
D. As a retirement of bonds.