Answered: Highlight Kiort Revenues and interest…

Highlight Kiort Revenues and interest income.. Operating and interest expense Other gains and losses . Net income.. $(670,000) 540,000 $(390,000) 221,000 _(120,000) $(250,000) (32,000) $(201,000)

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter2: Analysis Of Financial Statements

Section: Chapter Questions

Problem 16PROB

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Highlight, Inc., owns all outstanding stock of Kiort Corporation. The two companies report the following balances for the year ending December 31, 2017:
On January 1, 2017, Highlight acquired on the open market bonds for $108,000 originally issued by Kiort. This investment had an effective rate of 8 percent. The bonds had a face value of $100,000 and a cash interest rate of 9 percent. At the date of acquisition, these bonds were shown as liabilities by Kiort with a carrying amount of $84,000 (based on an effective rate of 11 percent). Determine the balances that should appear on a consolidated income statement for 2017.

Highlight
Kiort
Revenues and interest income..
Operating and interest expense
Other gains and losses .
Net income..
$(670,000)
540,000
$(390,000)
221,000
_(120,000)
$(250,000)
(32,000)
$(201,000)

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