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In: Accounting
Big Co. owns 80% of the stock of Little Co. On 1/1/23 Little issues $100,000 of...
Big Co. owns 80% of the stock of Little Co. On 1/1/23 Little issues $100,000 of 10%, 10 year bonds directly to Big for $103,000. Big and Little both use straight-line amortization.
Prepare elimination entries RELATING TO THIS INTERCOMPANY TRANSACTION for 2023 and 2024
Solutions
Expert Solution
Part 1
| Interest payment (100000*10%) | 10,000 |
| Add: premium amortization | 300 |
| Interest expense | 10,300 |
| Investment in Bond, on beginning | 103,000 |
| Less: premium amortization ((103000-100000)/10) | 300 |
| Investment in bond, on Dec 31, 2023 | 102,700 |
| Date | General journal | Debit | Credit |
| Dec 31, 2023 | Bond payable | 100,000 | |
| Premium on bond payable | 2,700 | ||
| interest income | 10,300 | ||
| Interest expense | 10,300 | ||
| Investment in Bond | 102,700 | ||
| To record elimination entry. |
Part 2
| Investment in bond, on Dec 31, 2023 | 102,700 |
| Less: premium amortization ((103000-100000)/10) | 300 |
| Investment in bond, on Dec 31, 2024 | 102,400 |
| Date | General journal | Debit | Credit |
| Dec 31, 2024 | Bond payable | 100,000 | |
| Premium on bond payable | 2,400 | ||
| interest income | 10,300 | ||
| Interest expense | 10,300 | ||
| Investment in Bond | 102,400 | ||
| To record elimination entry. |
ekkarill92 answered 2 years agoRelated Solutions
Big Co. owns 60% of Little Co common stock. On 1/1/23 Big Co sold a patent...
Big Co. owns 60% of Little Co common stock. On 1/1/23 Big Co
sold a patent to Little Co for $32,000. The patent had a book value
of $20,000 on that date, with a 4 year remaining useful life.
On 5/1/26 Little sells the patent to a third party for
$20,000.
Little Co reports earnings of $50,000 each year.
Big uses the FULL equity method to account for their investment
in Little.
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Question 11 pts
How much...
Big Co. owns 60% of Little Co common stock. On 1/1/23 Big Co sold a patent...
Big Co. owns 60% of Little Co common stock. On 1/1/23 Big Co
sold a patent to Little Co for $32,000. The patent had a book value
of $20,000 on that date, with a 4 year remaining useful life.
On 5/1/26 Little sells the patent to a third party for $20,000.
Little Co reports earnings of $50,000 each year.
Big uses the FULL equity method to account for their investment
in Little.
1. How much was the unrealized gain or...
Big Co. owns 60% of Little Co common stock. On 1/1/23 Big Co sold a patent...
Big Co. owns 60% of Little Co common stock. On 1/1/23 Big Co
sold a patent to Little Co for $32,000. The patent had a book value
of $20,000 on that date, with a 4 year remaining useful life.
On 5/1/26 Little sells the patent to a third party for $20,000.
Little Co reports earnings of $50,000 each year.
Big uses the FULL equity method to account for their investment
in Little.
1. How much was the unrealized gain or...
Big Co. owns 60% of the stock of Little Co. On 1/1/22, Little Co sells land...
Big Co. owns 60% of the stock of Little Co.
On 1/1/22, Little Co sells land to Big Co for $50,000. The land
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On 3/1/25, Big Co sells the land to a thirds party for
$80,000
Little Co reports earnings of $50,000 each year.
What is the unrealized gain on sale in 2022?
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Big Co. purchases shares of Little Co starting on 1/1/21. Little Co. has 100,000 shares of...
Big Co. purchases shares of Little Co starting on 1/1/21. Little
Co. has 100,000 shares of stock outstanding. Relevant data shown
below:
1/1/21: Purchased 5,000 shares at $18/share, plus $10
commission.
11/1/21: Little Co. paid common dividends totaling $10,000
12/31/21: Little Co. stock trading at $20/share
4/1/22: Purchased 6,000 shares at $21/share, plus $10
commission
11/1/22: Little Co. paid dividends totaling $10,000
12/31/22: Little Co stock trading at $19/share
3/1/23: Sold 1,000 shares of Little Co stock at $19.50/share,
less...
Big Co. purchases shares of Little Co starting on 1/1/21. Little Co. has 100,000 shares of...
Big Co. purchases shares of Little Co starting on 1/1/21. Little
Co. has 100,000 shares of stock outstanding. Relevant data shown
below:
1/1/21: Purchased 5,000 shares at $18/share, plus $10
commission.
11/1/21: Little Co. paid common dividends totaling $10,000
12/31/21: Little Co. stock trading at $20/share
4/1/22: Purchased 6,000 shares at $21/share, plus $10
commission
11/1/22: Little Co. paid dividends totaling $10,000
12/31/22: Little Co stock trading at $19/share
3/1/23: Sold 1,000 shares of Little Co stock at $19.50/share, less...
Assume that Big Company owns 40% of the stock of Little. Big is the largest shareholder...
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During 2022, Little reports earnings of $50,000 and pays dividends
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On January 1, 2018, Riney Co. owned 80% of the common stock of Garvin Co. On...
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Common stock ($5 par value)
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