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On January 1, Year 5, Ali Corp. sold $200,000 par value, 10-year first mortgage bonds to Fredericton Ltd. and $150,000 of these bonds to a
On January 1, Year 5, Ali Corp. sold $200,000 par value, 10-year first mortgage bonds to Fredericton Ltd. and $150,000 of these bonds to a noncontrolling shareholder. The bonds, which bear a nominal interest rate of 12 percent, pay interest annually on December 31. The entry to record interest income by Fredericton Ltd. on December 31, Year 7, was as follows: Cash 24,000 Interest income 23,000 Investment in Ali Corp. bonds 1,000 Fredericton owns 65 percent of the voting stock of Ali. It uses the straight-line method to account for its investment in bonds. Required: (a) What was the original purchase price of the bonds by Fredericton and the noncontrolling interest? Assume that they paid the same price per each thousand dollars of bonds. (Omit $ sign in your response.) Fredericton $ 191667 Noncontrolling shareholders $ 8333 (b) What are the balances in Fredericton's and the noncontrolling interest's investment in Ali bonds account on December 31, Year 7? (Omit $ sign in your response.) Fredericton $ 188667 Noncontrolling shareholders $ 8333 (c) What amounts should be reported on the Year 7 consolidated statements with respect to these bonds? (Omit $ sign in your response.) Bond payable $ 200000 Interest expense
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Ali Corp Bonds Analysis Assumptions We assume Fredericton Ltd and the noncontrolling shareholder pai...
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