Question
Problem 3 On January 1, 2019, Parent Company purchased 90% of the common stock of Subsidiary Company for $360,000. On January 1, 2019, Subsidiary sold
Problem 3
On January 1, 2019, Parent Company purchased 90% of the common stock of Subsidiary Company for $360,000. On January 1, 2019, Subsidiary sold $200,000 par value of 8%, ten-year bonds for $194,000. The bonds pay interest semi-annually on January 1 and July 1 of each year.
On January 1, 2021, Parent repurchased all of Subsidiary's bonds for $192,000. The bonds are still held on December 31, 2021.
Both companies have correctly recorded all entries relative to bonds and interest, using straight-line amortization for premium or discount.
Required:
Prepare the eliminating entries pertaining to the intercompany purchase of bonds for the year ended December 31, 2021.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started