a
Introduction:
Retirement of bonds: When a constrictive retirement takes place, the consolidated income statement for the year shows the profit or loss on retirement, but not reported in the consolidated
The entries in the books of P related to investment in S for the year 20X2.
b
Introduction:
Retirement of bonds: When a constrictive retirement takes place, the consolidated income statement for the year shows the profit or loss on retirement, but not reported in the consolidated balance sheet, if the company purchases the bond of a related company are acquired from an unrelated party at a price equal to the value reported, the elimination entries required to be prepared in the consolidated financial statement.
The entries in books of P related to bond payable for 20X2.
c
Introduction:
Retirement of bonds: When a constrictive retirement takes place, the consolidated income statement for the year shows the profit or loss on retirement, but not reported in the consolidated balance sheet, if the company purchases the bond of a related company are acquired from an unrelated party at a price equal to the value reported, the elimination entries required to be prepared in the consolidated financial statement.
The entries in books of T related to investment in P’s bonds for 20X2.
d
Introduction:
Retirement of bonds: When a constrictive retirement takes place, the consolidated income statement for the year shows the profit or loss on retirement, but not reported in the consolidated balance sheet, if the company purchases the bond of a related company are acquired from an unrelated party at a price equal to the value reported, the elimination entries required to be prepared in the consolidated financial statement.
The entries elimination entries to complete consolidation worksheet for 20X2.
e
Introduction:
Retirement of bonds: When a constrictive retirement takes place, the consolidated income statement for the year shows the profit or loss on retirement, but not reported in the consolidated balance sheet, if the company purchases the bond of a related company are acquired from an unrelated party at a price equal to the value reported, the elimination entries required to be prepared in the consolidated financial statement.
The preparation of consolidation worksheet for 20X2
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ADVANCED FINANCIAL ACCOUNTING IA
- Suspect Company Issued $720,000 of 8 percent first mortgage bonds on January 1, 20X1, at 105. The bonds mature in 20 years and pay interest semiannually on January 1 and July 1. Prime Corporation purchased $480,000 of Suspect's bonds from the original purchaser on January 1, 20X5, for $473,000. Prime owns 60 percent of Suspect's voting common stock. Required: a. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In preparing consolidated financial statements for 20X5. b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In preparing consolidated financial statements for 20X6. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements…arrow_forwardSuspect Company Issued $600,000 of 9 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in 20 years and pay Interest semiannually on January 1 and July 1. Prime Corporation purchased $400,000 of Suspect's bonds from the original purchaser on December 31, 20X5, for $397,000. Prime owns 60 percent of Suspect's voting common stock. Required: a. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In preparing consolidated financial statements for 20X5. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account fleld. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) No A B No A Event 1 B 2 Event 1 2 Bonds payable Premium on bonds payable Investment in Suspect Company bonds Gain on bond retirement Interest payable Answer is complete but not entirely correct. Accounts Interest receivable b. Prepare the worksheet…arrow_forwardSuspect Company Issued $600,000 of 9 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in 20 years and pay Interest semiannually on January 1 and July 1. Prime Corporation purchased $400,000 of Suspect's bonds from the original purchaser on December 31, 20X5, for $397,000. Prime owns 60 percent of Suspect's voting common stock. Required: a. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In preparing consolidated financial statements for 20X5. (If no entry is required for a transaction/event, select "No journal entry required" In the first account field. Do not round your Intermediate calculations. Round your final answers to nearest whole dollar.) Answer is complete but not entirely correct. No Event A 1 Bonds payable Premium on bonds payable Accounts Investment in Suspect Company bonds Gain on bond retirement B 2 Interest payable Interest receivable Debit Credit 400,000 9,000 397,000 9,000…arrow_forward
- Midyear purchase of subsidiary’s bonds Sanur Corporation is a 90 percent subsidiary of Pare Corporation. On January 1, 2016, Sanur issued $1,000,000 par, 10 percent 5-year bonds with an unamortized premium of $50,000. On July 1, 2016, Pare Corporation purchased $400,000 par of the outstanding bonds of Sanur for $390,000. Straight-line amortization is used. REQUIRED: Calculate the following: 1. The gain or loss on constructive retirement of the bonds 2. The consolidated bond interest expense for 2016 3. The consolidated bond liability at December 31, 2016arrow_forwardSaturn Corporation issued $300,000 par value 10-year bonds at 107 on January 1, 20X3, which Star Corporation purchased. On July 1, 20X7, Pluto Corporation purchased $120,000 face value of Saturn bonds from Star. The bonds pay 12 percent interest annually on December 31. The preparation of consolidated financial statements for Saturn and Pluto at December 31, 20X9, required the following consolidation entry: Bonds Payable Premium on Bonds Payable Interest Income Investment in Saturn Corporation Bonds Interest Expense Investment in Saturn Corporation Stock NCT in NA of Saturn Corp. Multiple Choice Based on the information given above, what amount of gain or loss on bond retirement is included in the 20X7 consolidated income $6,600 $4,800 16.000 120,000 2,520 14,760 $5,400 118,920 13,560 3,120 1,680arrow_forwardbond transaction Intercompany 4 On January 1, 20x1, Sing Co. acquired 75% interest in Dance Co. On this date, Sing Co.'s net identifiable assets have a carrying amount of P200,000, equal to fair value. Non- controlling interest was measured using the proportionate share method. On December 31, 20x1, Dance, Inc. purchased all of the outstanding bonds of Sing Co. from the open market for P250,000. There were no other intercompany transactions during the year. The year-end individual financial statements show the following information: Sing Co. Dance Co. ASSETS 180,000 Investment in subsidiary (at cost) Investment in bonds Other assets TOTAL ASSETS 250,000 50,000 300,000 500,000 680,000 LIABILITIES AND EQUITY Accounts payable 40,000 30,000arrow_forward
- Packed Corporation owns 70 percent of Snowball Enterprises' stock. On January 1, 20X1, Packed sold $1.13 million par value, 6 percent (paid semiannually), 20-year, first mortgage bonds to Kling Corporation at 98. On January 1, 20X8, Snowball purchased $339,000 par value of the Packed bonds directly from Kling for $336,480. Required: Prepare the consolidation entry needed at December 31, 20X8, to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) X Answer is not complete. Accounts Debit Credit No A Event 1 Bonds payable 339,000 Interest income Loss on constructive bond retirement Investment in Packed Corporation bonds 336,674 Interest expense Discount on bonds payablearrow_forwardPowell Company owns an 80% interest in Sauter, Inc. On January 1, 20X1, Sauter issued $400,000 of 10-year, 12% bonds at a premium of $50,000. On December 31, 20X5, 5 years after original issuance, Powell purchased all of the outstanding bonds for $390,000. Both firms use the straight-line method of amortization. The interest adjustment in the 20X5 subsidiary income distribution schedule is ____. a. $2,000 b. $5,000 c. $4,500 d. $0arrow_forwardOn January 1, 20x1, ABC Co. acquired 10%, P1,000,000 bonds for P827,135. The bonds mature on December 31, 20x3 and pay annual interest every December 31. ABC Co. incurred transaction costs P80,000 on the acquisition. The effective interest rate adjusted for the effect of the transaction costs is 14%. The bonds are to be held under a "hold to collect and sell" business model. Information on fair values is as follows: December 31, 20x1...............98 December 31, 20x2..............102 December 31, 20x3..............100 9.How much is the carrying amount of the investment on December 31, 20x1? a. 935,134 b. 1,002,000 c. 980,000 d. 965,443 10. How much is the unrealized gain (loss) recognized in other comprehensive income on December 31, 20x1? a. 45,866 b. (45,866) c. (37,899) d. 0 11. How much is the interest income recognized in 20x2? a. 126,999 c. 135,088 b. 130,779 d. 144,388arrow_forward
- Investor Company purchased 70% of the $500,000 par value outstanding bonds of Investee Company, a 70% owned subsidiary. The bonds cost $338,000 and had a carrying value of $360,000 on the date of purchase. a. What portion of the gain or loss resulting from the constructive bond retirement should be allocated to Investor Company? b. What portion of the constructive gain or loss should be allocated to Investee Company?arrow_forwardhf. Darnell Ltd. acquired 60 percent of Tisha Co. The acquisition calls for Darnell to issue an additional 100 shares to Tisha in one year if Tisha meets a predetermined sales goal. This contingent consideration a. should be reported only in the notes to the financial statement. b. should be valued at its fair value as of the acquisition date. c. should be valued at fair value as of the acquisition date and revalued at the year-end. d. should not be reported unless the goal is met.arrow_forward
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning