(20 pnts) 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, 2010, 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, 2012, for 95% of the face value. Both companies utilized the straight-line method of amortization.

(1800000 x 108%)	1944000
Less: Premium amortization for
2 years ($144000/10years x 2years)	($28800)
Book value of Bonds payable on Jan 1, 2012	1915200
40% of Book Value on Jan 1, 2012	766080
40% of face value of bonds ($1800000 x 40%)	720,000
Book value of Bonds for Fargus ($72000 x 95%)	684000
Discount on Bonds	36000
Amortization of Bond Discount ($36000/8 years)	4500
Interest on Bond = $720000 x 10% = $72000

a. Prepare amortization tables for Fargus (4/1/2012 to 12/31/2013) and Sanatee (1/1/2010 to 12/31/2013)

Amortization table for Fargus (4/1/2012 to 12/31/2013)
Date	Interest	Discount amortized	Cash Received	Bond Balance
4/1/2012				684000
12/31/2012	72000	4500	67500	688500
12/31/2013	72000	4500	67500	693000

Amortization table for Sanatee (1/1/2010 to 12/31/2013)
Date	Interest exp.	Premium amortization	Cash Paid	Balance in Bonds Premium	Balance in Bonds Payable	Book value of Bonds
1/1/2010				144000	1800000	1944000
12/31/2010	$180,000	14400	165600	129600	1800000	1929600
12/31/2011	$180,000	14400	165600	115200	1800000	1915200
12/31/2012	$180,000	14400	165600	100800	1800000	1900800
12/31/2013	$180,000	14400	165600	86400	1800000	1886400