Question
Weber Company issued five-year, 10% bonds on January 2, 2014, for 105. Par value is $850,000. Interest is paid semiannually on June 30 and December
Weber Company issued five-year, 10% bonds on January 2, 2014, for 105. Par value is $850,000. Interest is paid semiannually on June 30 and December 31. Weber Company is a 90%-owned subsidiary of Fairfield Company. On December 31, 2014, Fairfield Company purchased $510,000 of Weber Company's par value bonds at 90 after the semiannual interest payment had been made. Weber Company declared dividends of $60,000 in 2014 and $80,000 in 2015. Both companies use the straight-line method to amortize bond discount and premium.
1.Compute the total gain or loss on the constructive retirement of the debt.
2.Allocate the total gain or loss between Weber Company and Fairfield Company.
3.Prepare the book entries related to the bonds made by the individual companies in 2015.
4.Assume that the two companies reported net income as follows:
Fairfield Company Weber Company
2014 $275,000 $190,000
2015 350,000 225,000
Compute controlling interest in consolidated net income and the noncontrolling interest in consolidated income for 2014 and 2015.
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