a
Introduction: Intercompany sale of bonds is a situation where the company sells its own bonds to its subsidiary. In this case, it cannot sell the bonds to its subsidiary as an investment in its own bonds to itself, as the entity is now a consolidated entity, thus all amounts linked to intercompany obligation must be eliminated, including bonds investment, payable any unamortized discount or premium, the interest income or expenses or any accrued interest receivable or payable.
The consolidation entries needed to remove the effect of inter-corporate bond ownership for 20X8.
b
Introduction: Intercompany sale of bonds is a situation where the company sells its own bonds to its subsidiary. In this case, it cannot sell the bonds to its subsidiary as an investment in its own bonds to itself, as the entity is now a consolidated entity, thus all amounts linked to intercompany obligation must be eliminated, including bonds investment, payable any unamortized discount or premium, the interest income or expenses or any accrued interest receivable or payable.
The amount of income assigned to non-controlling interest assuming S reported net income for 20X8 is $20,000.
c
Introduction: Intercompany sale of bonds is a situation where the company sells its own bonds to its subsidiary. In this case, it cannot sell the bonds to its subsidiary as an investment in its own bonds to itself, as the entity is now a consolidated entity, thus all amounts linked to intercompany obligation must be eliminated, including bonds investment, payable any unamortized discount or premium, the interest income or expenses or any accrued interest receivable or payable.
The consolidation entries needed to remove the effects of inter-corporate bond ownership for 20X9
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Chapter 8 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
- All of the following situations will arise to actual disposition except ______________. Question 6 options: a) Purchase of debt or shares b) Sale of asset or property c) Redemption of shares d) Cancellation of debt securitiesarrow_forwardIf an associate incurs losses, the investor is required to________. Select one: a. recognise the losses only to the point where the carrying amount of the investment is equal to zero b. reclassify the investment as current assets c. recognise the losses only to the point where the carrying amount of the investment is equal to the initial investment d. ignore the losses for the purposes of equity accounting adjustmentsarrow_forward9. At the time of acquisition of a debt investment a. no journal entry is required b. the cost principle applies c. the Stock Investments account is debited when bonds are purchased d. the Investment account is credited for its cost plus brokerage feesarrow_forward
- Presented below are two independent cases related to available-for-sale debt investments. Amortized cost Fair value Expected credit losses Case 2 Case 1 Case 2 $37,230 $91,300 26,680 100,350 82,740 For each case, determine the amount of impairment loss, if any. Of no loss, please enter O. Do not leave any fields blank) Case 1 Impairment Loss $ Impairment Loss $ 21,640arrow_forwardAccounting type Question: When investment in private debentures is cancelled then this profit/loss is credited / debited to A. Debenture Redemption fund A/c B. General reserve A/c C. Capital reserve A/c D. Any of the above A/carrow_forwardRecording Entries for Impairment-AFS Determine the amount of impairment loss (if any) to record in income under the following three separate scenarios for an AFS debt investment. In all three cases, the company does not intend to sell and does not believe it is more likely than not that it will be required to sell the investment before recovery of any unrealized loss. Assume that the company has already adjusted the AFS investments to fair value through OCI. Scenario Fair value $ Amortized cost $ Expected credit loss $ Impairment loss $ 1 216,000 $ 192,000 $ 36,000 $ 0$ 2 168,000 $ 192,000 $ 36,000 $ 24,000 $ 3 144,000 192,000 36,000 12,000 xarrow_forward
- Which of the following statements regarding capital asset holding periods is false? Group of answer choices A. Trade dates, rather than settlements dates, are used to determine the date of acquisition and sale. B.The holding period for property received as a gift usually includes the holding period of the donee. C.The holding period for property acquired from a decedent is long term even if the property is sold less than one year after it was acquired. D. A holding period of exactly one year or more is long term.arrow_forwardPresented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale. Amortized cost Fair value (a) Indicate whether the bonds were purchased at a discount or at a premium. (b) (c) No. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) (b) C 12/31/25 12/31/26 12/31/27 $489,700 $546,800 $501,000 496,100 535,800 501,000 Prepare the adjusting entry to record the bonds at fair value at December 31, 2025. The Fair Value Adjustment account has a debit balance of $1,100 prior to adjustment. Prepare the adjusting entry to record the bonds at fair value at December 31, 2026. Date eTextbook and Media List of Accounts Account Titles and Explanation Debit Credarrow_forwardWhen convertible debt is retired by the issuer, any material difference between the cash acquisition price and the carrying amount of the debt should be ________. treated as a prior period adjustment treated as an adjustment of additional paid-in-capital reflected currently in incomearrow_forward
- Mf2. -The market value option (fair value option) a. Does not apply to investments in bonds classified as available for sale b. Does not apply to investments in bonds classified as hold until maturity. expiration c. Does not apply to investments in common shares accounted for using the equity method d. The three previous alternatives are incorrect.. -Which of these changes in the method of accounting for investments in common stock requires a retroactive adjustment to the balance of the investment? a. Change from “fair value through net income” to “equity method” b. Change from “equity method” to “fair value through net income” c. Both "a" and "b" are correct. d. Neither "a" nor "b" are correctarrow_forwardConcord Limited, a public company that follows IFRS and has a calendar year end, made the following purchases of investments in 2023. Concord intends to sell these investments to earn short-term profits from appreciation in their prices and accounts for the investments using the FV-NI model. This is the first year in which Concord invested in equity securities: 1. 2. On March 20, purchased 5,400 shares of Wu Inc. common shares at $29 per share plus commission of $450. On August 15, purchased 3,100 shares of Xi Inc. common shares at $27 per share plus commission of $400. On June 30, Concord sold 3,240 shares of Wu Inc. at $31 less commission of $660. The December 31, 2023 market value of the Wu shares was $32 and of the Xi shares was $26.arrow_forwardAll equity securities and investments in debt securities that are intended to be sold in the near term are classified as held-to-maturity securities. trading securities. available-for-sale securities. none of these choices. 2. Any change in the fair value of trading securities is reported on the income statement as part of net income. reported as part of other comprehensive income in the shareholders' equity section of the balance sheet. ignored; only the amortized cost is reflected in the financial statements. reported as a cash outflow in the investing activities section of the statement of cash flows. 3. A minority active investment with significant influence occurs when the investor owns between 10% and 20% of the voting common stock of the investee. over 50% of the voting common stock of the investee. between 20% and 50% of the voting common stock of the investee. over 50% of the preferred stock of the investee.arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningAuditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
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