Question
Lotus Corporation owned 51% of the voting common stock of Barrett, Inc. The parent's interest was acquired several years ago on the date that the
Lotus Corporation owned 51% of the voting common stock of Barrett, 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, Barrett sold $1,400,000 in ten-year bonds to the public at 108. The bonds pay a 10% interest rate every December 31. Lotus acquired 40% of these bonds on January 1, 2012, for 95% of the face value. Both companies utilized the straight-line method of amortization. On December 31, 2013, what consolidation entry would be recorded in connection with these intra-entity bonds? Show computations
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