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Sometime in the past, Bottom Co. sold $1,800,000 in bonds to the public. Annual coupon interest payment of 9 percent is to be made on

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Sometime in the past, Bottom Co. sold $1,800,000 in bonds to the public. Annual coupon interest payment of 9 percent is to be made on this long-term debt. The bonds were issued at discount to yield an effective interest rate of 12 percent. At the beginning of 2020, Top Co., the parent of Bottom Co., purchased $360,000 of the bonds of Bottom in the open market for $402,000, a price that yields an effective interest rate of 7 percent. The long-term debt had a carrying amount on that date of $1,520,000. Answer the following assuming that the equity method is applied. a. What consolidation entry is required on December 31, 2020? b. What consolidation entry is required on December 31, 2022? Sometime in the past, Bottom Co. sold $1,800,000 in bonds to the public. Annual coupon interest payment of 9 percent is to be made on this long-term debt. The bonds were issued at discount to yield an effective interest rate of 12 percent. At the beginning of 2020, Top Co., the parent of Bottom Co., purchased $360,000 of the bonds of Bottom in the open market for $402,000, a price that yields an effective interest rate of 7 percent. The long-term debt had a carrying amount on that date of $1,520,000. Answer the following assuming that the equity method is applied. a. What consolidation entry is required on December 31, 2020? b. What consolidation entry is required on December 31, 2022

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