The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles.

Required: Determine the specific citation for accounting for the following:

1.In general, there shall be eliminated intercompany items and transactions between persons included in the (a) consolidated financial statements being filed and, as appropriate, (b) unrealized intercompany profits and losses on transactions between persons for which financial statements are being filed and persons the investment in which is presented in such statements by the equity method. If such eliminations are not made, a statement of the reasons and the methods of treatment shall be made.

2.The purpose of consolidated financial statements is to present the results of operations and the financial position of the parent and its subsidiaries as if the consolidated group were a single economic entity.

3.Consolidated financial statements shall disclose the consolidation policy that is being followed. In most cases this can be made apparent by the headings or other information in the financial statements, but in other cases a note to financial statements is required.

Nettle Corporation sold $160,000 par value, 10-year first mortgage bonds to Timberline Corporation on January 1, 20x5. The bonds, which bear a nominal interest rate of 8 percent, pay interest semiannually on January 1 and July 1. The entry to record interest income by Timberline Corporation on December 31 20X7, was as follows Note: Assume using straight-line amortization of bond discount or premium General Journal Debit 6,400 Credit Interest Receivable Interest Income Investment in Nettle Corporation Bonds 6,080 320 Timberline Corporation owns 65 percent of the voting stock of Nettle Corporation, and consolidated statements are prepared on December 31, 20X7