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Cairns owns 80 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2014, Hamilton sold $1,500,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 8 percent payable every December 31. Cairns acquired 45 percent of these bonds at 96 percent of face value on January 1, 2016. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. December 31, 2016 b. December 31, 2017 c. December 31, 2018

Cairns owns 80 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2014, Hamilton sold $1,500,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 8 percent payable every December 31. Cairns acquired 45 percent of these bonds at 96 percent of face value on January 1, 2016. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. December 31, 2016 b. December 31, 2017 c. December 31, 2018

SWFT Corp Partner Estates Trusts
SWFT Corp Partner Estates Trusts
42nd Edition
ISBN:9780357161548
Author:Raabe
Publisher:Raabe
Chapter7: Corporations: Reorganizations
Section: Chapter Questions
Problem 27P
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Cairns owns 80 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2014, Hamilton sold $1,500,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 8 percent payable every December 31. Cairns acquired 45 percent of these bonds at 96 percent of face value on January 1, 2016. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. December 31, 2016 b. December 31, 2017 c. December 31, 2018 Consolidation Worksheet Entries 1 2 Prepare Entry B to eliminate accounts stemming from intra-entity bonds and to recognize the gain on the effective retirement of this debt. Note: Enter debits before credits. Date December 31, 2016 < Consolidation Worksheet Entries 1 3 2 Date December 31, 2017 3 Note: Enter debits before credits. Prepare Entry *B to remove the intra-entity bond accounts that remain on the individual records of both companies. Consolidation Worksheet Entries < 1 2 3 Date December 31, 2018 Accounts Note: Enter debits before credits. Accounts Debit Accounts Debit Prepare Entry *B to remove the intra-entity bond accounts that remain on the individual records of both companies. Credit Debit Credit Credit
Transcribed Image Text:Cairns owns 80 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2014, Hamilton sold $1,500,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 8 percent payable every December 31. Cairns acquired 45 percent of these bonds at 96 percent of face value on January 1, 2016. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. December 31, 2016 b. December 31, 2017 c. December 31, 2018 Consolidation Worksheet Entries 1 2 Prepare Entry B to eliminate accounts stemming from intra-entity bonds and to recognize the gain on the effective retirement of this debt. Note: Enter debits before credits. Date December 31, 2016 < Consolidation Worksheet Entries 1 3 2 Date December 31, 2017 3 Note: Enter debits before credits. Prepare Entry *B to remove the intra-entity bond accounts that remain on the individual records of both companies. Consolidation Worksheet Entries < 1 2 3 Date December 31, 2018 Accounts Note: Enter debits before credits. Accounts Debit Accounts Debit Prepare Entry *B to remove the intra-entity bond accounts that remain on the individual records of both companies. Credit Debit Credit Credit
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