Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Plug Corporation purchased $112,000 par value bonds of its subsidiary, Spark Company, on December 31, 20X5, from Lemon Corporation. The 10-year bonds bear a 9

image text in transcribedimage text in transcribed

Plug Corporation purchased $112,000 par value bonds of its subsidiary, Spark Company, on December 31, 20X5, from Lemon Corporation. The 10-year bonds bear a 9 percent coupon rate, and Spark originally sold them on January 1, 20X3, to Lemon. Interest is paid annually on December 31. Plug owns 85 percent of the stock of Spark. In preparing the consolidation worksheet at December 31, 20X6, Plug's controller made the following entry to eliminate the effects of the intercorporate bond ownership: Consolidation Worksheet Entries Debit Credit Bonds Payable 112,000 Interest Income 9,680 Investment in Spark Company Stock 5,355 NCI in NA of Spark Company Investment in Spark Company Bonds 114,400 Discount on Bonds Payable 3,000 Interest Expense 10,580 945 e. Spark reported net income of $68,000 and $88,000 for 20x5 and 20X6, respectively. Plug reported income from its separate operations of $128,000 and $158,000 for 20x5 and 20X6, respectively. What amount of consolidated net income and income to the controlling interest will be reported in the consolidated income statements for 20x5 and 20X6? 20x5 20X6 Consolidated net income Income to controlling interest

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

Financial Accounting A Valuation Emphasis

Authors: John S. Hughes, Frances L. Ayres, Robert E. Hoskin

1st Edition

0471203599, 978-0471203599

More Books

Students also viewed these Accounting questions

Question

What is organizational flattening? Why is it practiced?

Answered: 1 week ago