Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company. Bond: Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it. The amount of interest expense to be reported in consolidates income statement.

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Answer 1

Question

Chapter 8, Problem 8.11AE

a.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

Bond: Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.

The amount of interest expense to be reported in consolidates income statement.

b.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

Gain or loss on bond retirement.

c.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

The journal entries to remove the effect of intercompany bond ownership.

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On June 30, 1984, the original issue date , T. Taylor purchases $300,000 of 20-year , 7% convertible bonds of Jones corporation at 104. Jones bonds are convertible to 50 shares of $ 10npar common stock for each $1000 bond. The bond interest is paid semi-annually, June 30 and December 31. On March 31,1989, Taylor converts $200,000 of the bonds. Both Taylor and Jones Corp. use calendar year as their fiscal year. (a) Give entries to record the conversion in the absence of a market value for the stock. (b) Give the entries to record conversion if the market value of the stock is $25.

Answer 2

Question

Chapter 8, Problem 8.11AE

a.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

Bond: Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.

The amount of interest expense to be reported in consolidates income statement.

b.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

Gain or loss on bond retirement.

c.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

The journal entries to remove the effect of intercompany bond ownership.

Expert Solution & Answer

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Answer 3

Question

Chapter 8, Problem 8.11AE

a.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

Bond: Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.

The amount of interest expense to be reported in consolidates income statement.

b.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

Gain or loss on bond retirement.

c.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

The journal entries to remove the effect of intercompany bond ownership.

Expert Solution & Answer

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Answer 4

Question

Chapter 8, Problem 8.11AE

a.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

Bond: Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.

The amount of interest expense to be reported in consolidates income statement.

b.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

Gain or loss on bond retirement.

c.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

The journal entries to remove the effect of intercompany bond ownership.

Expert Solution & Answer

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See solution

Answer 5

Chapter 8, Problem 8.11AE

a.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

Bond: Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.

The amount of interest expense to be reported in consolidates income statement.

b.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

Gain or loss on bond retirement.

c.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

The journal entries to remove the effect of intercompany bond ownership.

Answer 6

Chapter 8, Problem 8.11AE

a.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

Bond: Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.

The amount of interest expense to be reported in consolidates income statement.

Answer 7

Chapter 8, Problem 8.11AE

a.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

Bond: Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.

The amount of interest expense to be reported in consolidates income statement.

Answer 8

b.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

Gain or loss on bond retirement.

Answer 9

b.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

Gain or loss on bond retirement.

Answer 10

c.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

The journal entries to remove the effect of intercompany bond ownership.

Answer 11

c.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

The journal entries to remove the effect of intercompany bond ownership.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 8 - Prob. 8.1Q Ch. 8 - What is meant by a constructive bond retirement in...Ch. 8 - Prob. 8.3Q Ch. 8 - Prob. 8.4Q Ch. 8 - When a parent company sells land to a subsidiary...Ch. 8 - Prob. 8.7Q Ch. 8 - Prob. 8.8Q Ch. 8 - Prob. 8.9Q Ch. 8 - Prob. 8.10Q Ch. 8 - Prob. 8.11Q

Solution Summary: The author explains that consolidation is the process of combining financial results of various subsidiaries with the financial result of parent company.

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Chapter 8 Solutions