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show working 5) Parent purchases subsidiary bonds Parent Corporation owns a 70 percent interest in Sub Corporation acquired several years ago at book value equal
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5) Parent purchases subsidiary bonds Parent Corporation owns a 70 percent interest in Sub Corporation acquired several years ago at book value equal to fair value. On January 1, 2011, Subn had outstanding $3,000,000 of 9 percent bonds with a book value of $2,970,000. On January 2, 2011, Parent purchased $1,500,000 of $ub 's 9 percent bonds for $1,509,000. The bonds are due on January 1, 2015, and pay interest on January 1 and July 1. Sub reported net income of $42,000 in 2011. REQUIRED a. Determine the gain or loss on the constructive retirement of Sub's bonds. b. Determine Parent's income from Sub in 2011 Step by Step Solution
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