Consolidated amounts when affiliate's debt is acquired from non-affiliate Assume that a Parent company owns 100 percent of its Subsidiary. On January 1, 2019, the Parent company had $360,000 of bonds payable (par) outstanding with a carrying value of $378,000. The bonds were originally issued to an unaffiliated company. On that same date, the Subsidiary acquired the bonds for $356,400. During 2019, the Parent company reported $162,000 of (pre-consolidation) income from its own operations (i.e., prior to any equity method adjustments by the Parent company) and after recording interest expense. The Subsidiary reported $90,000 of (pre-consolidation) income from its own operations after recording interest income. Related to the bonds during 2019, the parent reported interest expense of $40,500 while the subsidiary reported interest income of $36,900. Determine the following amounts that will appear in the 2019 consolidated income statement: Note: If no amount will appear on the consolidated income statement, enter zero. If item c. is a loss, use a negative sign with your answer.

Consolidated amounts when affiliate's debt is acquired from non-affiliate Assume that a Parent company owns 100 percent of its Subsidiary. On January 1, 2019, the Parent company had $360,000 of bonds payable (par) outstanding with a carrying value of $378,000. The bonds were originally issued to an unaffiliated company. On that same date, the Subsidiary acquired the bonds for $356,400. During 2019, the Parent company reported $162,000 of (pre-consolidation) income from its own operations (i.e., prior to any equity method adjustments by the Parent company) and after recording interest expense. The Subsidiary reported $90,000 of (pre-consolidation) income from its own operations after recording interest income. Related to the bonds during 2019, the parent reported interest expense of $40,500 while the subsidiary reported interest income of $36,900. Determine the following amounts that will appear in the 2019 consolidated income statement: Note: If no amount will appear on the consolidated income statement, enter zero. If item c. is a loss, use a negative sign with your answer.

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Description: Consolidated amounts when affiliate's debt is acquired from non-affiliate Assume that a Parent companyowns 100 percent of its Subsidiary. On January 1, 2019, the Parent company had $360,000 of bondspayable (par) outstanding with a carrying value of

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is

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Question

Consolidated amounts when affiliate's debt is acquired from non-affiliate Assume that a Parent company
owns 100 percent of its Subsidiary. On January 1, 2019, the Parent company had $360,000 of bonds
payable (par) outstanding with a carrying value of $378,000. The bonds were originally issued to an
unaffiliated company. On that same date, the Subsidiary acquired the bonds for $356,400. During 2019, the
Parent company reported $162,000 of (pre-consolidation) income from its own operations (i.e., prior to any
equity method adjustments by the Parent company) and after recording interest expense. The Subsidiary
reported $90,000 of (pre-consolidation) income from its own operations after recording interest income.
Related to the bonds during 2019, the parent reported interest expense of $40,500 while the subsidiary
reported interest income of $36,900. Determine the following amounts that will appear in the 2019
consolidated income statement:
Note: If no amount will appear on the consolidated income statement, enter zero. If item c. is a loss, use a
negative sign with your answer.

a. Interest income from bond investment
b. Interest expense on bond payable
c. Gain (loss) on constructive retirement of bond payable $
d. Consolidated net income
$
$
tA
LA
$
LA
Amount
36,900 *
40,500 ×
0 x
255,600 ×

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