Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help with C only. Only numbers are wrong as far as I can tell. Problem 6-31 (LO 6-3) Opus, Incorporated, owns 90 percent of

Please help with C only. Only numbers are wrong as far as I can tell.

Problem 6-31 (LO 6-3) Opus, Incorporated, owns 90 percent of Bloom Company. On December 31, 2017, Opus acquires half of Bloom's $500,000 outstanding bonds. These bonds had been sold on the open market on January 1, 2015, at a 12 percent effective rate. The bonds pay a cash interest rate of 10 percent every December 31 and are scheduled to come due on December 31, 2027. Bloom issued this debt originally for $435,763. Opus paid $283,550 for this investment, indicating an 8 percent effective yield. Assuming that both parties use the effective rate method, what gain or loss from the retirement of this debt should be reported on the consolidated income statement for 2017?

Assuming that both parties use the effective rate method, what balances should appear in the Investment in Bloom Bonds account on Opuss records and the Bonds Payable account of Bloom as of December 31, 2018?

C. Assuming that both parties use the straight-line method, what consolidation entry would be required on December 31, 2018, because of these bonds? Assume that the parent is not applying the equity method.

image text in transcribedimage text in transcribed

Problem 6-31 (LO 6-3) Opus, Incorporated, owns 90 percent of Bloom Company. On December 31, 2017, Opus acquires half of Bloom's $500,000 outstanding bonds. These bonds had been sold on the open market on January 1, 2015, at a 12 percent effective rate. The bonds pay a cash interest rate of 10 percent every December 31 and are scheduled to come due on December 31, 2027. Bloom issued this debt originally for $435,763. Opus paid $283,550 for this investment, indicating an 8 percent effective yield a. Assuming that both parties use the effective rate method, what gain or loss from the retirement of this debt should be reported on the consolidated income statement for 2017? on Opus's records and the Bonds Payable account of Bloom as of December 31, 2018? because of these bonds? Assume that the parent is not applying the equity method. b. Assuming that both parties use the effective rate method, what balances should appear in the Investment in Bloom Bonds account c. Assuming that both parties use the straight-line method, what consolidation entry would be required on December 31, 2018 Note: Enter debits before credits. Transaction Accounts Debit Credit Bonds payable Interest income Retained earnings Interest expense 229,562 20,806 56,909 Investment in Bloom Bonds 279,356 Record entry Clear entry view consolidation entries

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

What is focal length? Explain with a diagram and give an example.

Answered: 1 week ago

Question

What is physics and how does it apply in daily life?

Answered: 1 week ago

Question

a valuing of personal and psychological privacy;

Answered: 1 week ago