On May 31, 2005, Patrick Corporation acquired at 100, $500,000 face amount of Stear Company\'s 10-year, 12%, convertible bonds due May 31, 2010. The bonds were convertible to 50,000 shares of Stear\'s voting common stock ($1 par), of which 40,000 shares were issued and outstanding on May 31, 2005. The controller of Patrick, who also is one of three Patrick officers who serve on the five-member board of directors of Stear, proposes to issue consolidated financial statements for Patrick Corporation and Stear Company on May 31, 2005.

 

Instructions

Do you agree with the Patrick controller\'s proposal? Explain.