Parent owns 100% of subsidiary. Subsidiary has bonds payable to third parties of $5,500,000., plus an unamortized premium with a credit balance of $500,000. In 2022, parent purchases all outstanding bonds from third parties for $6,400,000. What result is reported in the 2022 consolidated financial statements. a. Consolidated loss on “retirement” of bonds $400,000 b. No gain or loss is reported in the consolidated totals on this intercompany transaction. c. Consolidated loss on “retirement” of bonds of $1,400,000 d. Consolidated gain on “retirement” of bonds of $1,100,000 e. Consolidated gain on “retirement” of bonds of $400,000

Parent owns 100% of subsidiary. Subsidiary has bonds payable to third parties of $5,500,000., plus an unamortized premium with a credit balance of $500,000. In 2022, parent purchases all outstanding bonds from third parties for $6,400,000. What result is reported in the 2022 consolidated financial statements. a. Consolidated loss on “retirement” of bonds $400,000 b. No gain or loss is reported in the consolidated totals on this intercompany transaction. c. Consolidated loss on “retirement” of bonds of $1,400,000 d. Consolidated gain on “retirement” of bonds of $1,100,000 e. Consolidated gain on “retirement” of bonds of $400,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 29E

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A Parent Company owns 100 percent of its Subsidiary. During 2021, the Parent company reports net income (by itself, without any investment income from its Subsidiary) of $1,840,000 and the subsidiary reports net income of $736,000. The parent had a bond payable outstanding on December 31, 2021, with a carrying value equal to $1,545,600. The Subsidiary acquired the bond on December 31, 2021, for $1,453,600. During 2021, the Parent reported interest expense (related to the bond) of $128,800 while the Subsidiary reported no interest income (related to the bond). What is consolidated net income for the year ended December 31, 2021? b. $2,668,000 d. $2,796,800
P Inc. owns S Corp. For the current year, P reports net income (without consideration of its investment in S) of $185,000, and the subsidiary reports $105,000. The parent had a bond payable outstanding on January 1 with a carrying amount of $209,000. The subsidiary acquired the bond on that date for $196,000. During the current year, P reported interest expense of $18,000 while S reported interest income of $19,000 both related to the intra-entity bond payable. What is consolidated net income?
Fargus Corporation owned 61% of the voting common stock of Sanatee, 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 price.On January 1, 2020, Sanatee sold $1,800,000 in ten-year bonds to the public at 108. The bonds pay a 10% interest rate every December 31. Fargus acquired 40% of these bonds on April 1, 2022, for 95% of the face value. Both companies utilized the straight-line method of amortization. 1. Prepare amortization tables for Fargus (4/1/2022 to 12/31/2023) and Sanatee (1/1/2020 to 12/31/2023)? 2. Determine whether this is gain/loss on retirement of bond on April 1 2022? 3. Determine the consolidated interest expense on Dec 31 2022? 4. If Fargus has net income $200,000 and Sanatee has net income $50,000 in 2022, how much is the consolidated net income? 5. What consolidation entry would be recorded in connection with these…
Bolero Company holds 80 percent of the common stock of Rivera, Inc., and 40 percent of this subsidiary’s convertible bonds. The following consolidated financial statements are for 2017 and 2018: Additional Information for 2018 • The parent issued bonds during the year for cash. • Amortization of databases amounts to $15,000 per year. • The parent sold a building with a cost of $80,000 but a $40,000 book value for cash on May 11. • The subsidiary purchased equipment on July 23 for $205,000 in cash. • Late in November, the parent issued stock for cash. • During the year, the subsidiary paid dividends of $10,000. Both parent and subsidiary pay dividends in the same year as declared. Prepare a consolidated statement of cash flows for this business combination for the year ending December 31, 2018. (Use indirect method.)
argus Corporation owned 61% of the voting common stock of Sanatee, 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 price.On January 1, 2020, Sanatee sold $1,800,000 in ten-year bonds to the public at 108. The bonds pay a 10% interest rate every December 31. Fargus acquired 40% of these bonds on April 1, 2022, for 95% of the face value. Both companies utilized the straight-line method of amortization. a. Prepare amortization tables for Fargus (4/1/2022 to 12/31/2023) and Sanatee (1/1/2020 to 12/31/2023) b. Determine whether this is gain/loss on retirement of bond on April 1 2022 c. Determine the consolidated interest expense on Dec 31 2022 d. If Fargus has net income $200,000 and Sanatee has net income $50,000 in 2022, how much is the consolidated net income? e. What consolidation entry would be recorded in connection…
Pedro Corporation owns an 80% interest in Simon Company. In the consolidated financial statements on December 2020, the carrying amount of Simon’s net assets if P5,500,000 and the carrying amount of the non-controlling interest in Simon Company (including the non-controlling interest’s share of accumulated other comprehensive income) is P300,000. On January 1, 2021, Pedro Corporation decided to sell 50% of their interest in Simon Company to outsiders for cash proceeds of P3,750,000. As a result of this transaction, Pedro Corporation loses control of Simon Company but retains a 40% interest in the former subsidiary valued at P2,000,000. What is the gain in disposal or deconsolidation? Can you help me out, thank you!
Parent Company acquires 15% of Subsidiary Company’s ordinary shares for P500,000 cash and carries the investmentusing the equity method. A few months later, Parent purchases another 60% of Subsidiary’s ordinary shares for P2,160,000.At that date, Subsidiary Company reports identifiable assets with a book value of P3,900,000 and a fair value ofP5,100,000, and it has liabilities with a book value and fair value of P1,900,000.Determine:3. Goodwill arising from the consolidation if The fair value of the 25% non controlling interest in Subsidiary Company is P890,000.
Parent Company acquires 15% of Subsidiary Company’s ordinary shares for P500,000 cash and carries the investmentusing the equity method. A few months later, Parent purchases another 60% of Subsidiary’s ordinary shares for P2,160,000.At that date, Subsidiary Company reports identifiable assets with a book value of P3,900,000 and a fair value ofP5,100,000, and it has liabilities with a book value and fair value of P1,900,000.Determine: 1. Goodwill arising from the consolidation if The fair value of the 25% non controlling interest in SubsidiaryCompany is P890,000. 2. Goodwill arising from the consolidation if it is to be computed using the full (fair value basis of“Full/Gross-up” Goodwill.

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bartleby, a Learneo, Inc. business

	a.	Consolidated loss on “retirement” of bonds $400,000
	b.	No gain or loss is reported in the consolidated totals on this intercompany transaction.
	c.	Consolidated loss on “retirement” of bonds of $1,400,000
	d.	Consolidated gain on “retirement” of bonds of $1,100,000
	e.	Consolidated gain on “retirement” of bonds of $400,000