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Peanut Corporation acquired 80 percent of Snoopy Company's voting shares on January 1, 20X8, at underlying...

Peanut Corporation acquired 80 percent of Snoopy Company's voting shares on January 1, 20X8, at underlying book value. On Dec. 31, 20X8, it also purchased $500,000 par value 8 percent Snoopy bonds, which had been issued on January 1, 20X5 to Schulz Corporation (unaffiliated with either Peanut or Snoopy) at a $45,000 premium. The bonds were originally issued with a 12-year maturity and pay interest annually on December 31. During preparation of the consolidated financial statements for December 31, 20X8, the following consolidating entry was included in the consolidation worksheet:

Bonds Payable

500,000

Bond Premium

33,769

Loss on Bond Retirement

16,875

Investment in Snoopy Company Bonds

550,644

40) Based on the information given above, what price did Peanut pay to purchase the Snoopy bonds?

A) $533,769

B) $516,875

C) $500,000

D) $550,644

Answer: D

41) Based on the information given above, what was the carrying amount of the bonds on Snoopy's books on the date of purchase?

A) $533,769

B) $516,875

C) $500,000

D) $550,644

Answer: A

42) Based on the information given above, what is the interest income that must be eliminated in preparing the 20X9 consolidated financial statements?

A) $33,769

B) $27,957

C) $34,944

D) $16,894

Answer: C

Answers are provided. Please explain how to get these numbers!!!

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Expert Solution

ekkarill92 answered 1 year ago
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