Opus, Incorporated, owns 80 percent of Bloom Company. On January 1, 2017. Opus acquires half of Bloom's
Question:
Opus, Incorporated, owns 80 percent of Bloom Company. On January 1, 2017. Opus acquires half of Bloom's $700,000 outstanding bonds. Opus paid $390.226 for this investment, indicating an 8 percent effective yield.
The bonds of Bloom Company had been sold on the open market on January 1, 2014, at a 12 percent effective rate. The bonds pay a cash interest rate of 10 percent every January 1and are scheduled to come due on January 1, 2025. Bloom issued this debt originally on January , 2014 for $616,872.
Assume Opus Incorporated uses the equity method to account internally for its investment in Bloom Company
Required:
a.
Complete the amortization schedule below for Opus Incorporated's share of the bonds payable for Bloom Company using the straight-line method for amortization of bond premiums or discounts (Round your answers to 2 decimal points.)
b. Complete the amortization schedule below for Opus Incorporated's Investment in the bonds of Bloom Company using the straight-line method for amortization of bond premiums or discounts. (Round your answers to 2 decimal points.)
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella