Question
I need to do the entries for this and I am stuck. Several years ago Brant, Inc., sold $900,000 in bonds to the public. Annual
I need to do the entries for this and I am stuck.
Several years ago Brant, Inc., sold $900,000 in bonds to the public. Annual cash interest of 9 percent ($81,000) was to be paid on this debt. The bonds were issued at a discount to yield 12 percent. At the beginning of 2013, Zack Corporation (a wholly owned subsidiary of Brant) purchased $180,000 of these bonds on the open market for $201,000, a price based on an effective interest rate of 7 percent. The bond liability had a book value on that date of $760,000. Assume Brant uses the equity method to account internally for its investment in Zack.
a. & b. | What consolidation entry would be required for these bonds on December 31, 2013 and December 31, 2015? (If no entry is required for |
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