Question
In: Advanced Math
Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of...
Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of 9 percent ($86,400) was to be paid on this debt. The bonds were issued at a discount to yield 12 percent. At the beginning of 2016, Zack Corporation (a wholly owned subsidiary of Brant) purchased $160,000 of these bonds on the open market for $181,000, a price based on an effective interest rate of 7 percent. The bond liability had a carrying amount on that date of $930,000. Assume Brant uses the equity method to account internally for its investment in Zack.
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a. & b. What consolidation entry would be required for these bonds on December 31, 2016 and December 31, 2018?
Solutions
Colby Messinger answered 2 years agoRelated Solutions
Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of...
Several years ago Brant, Inc., sold $960,000 in bonds to the
public. Annual cash interest of 7 percent ($67,200) was to be paid
on this debt. The bonds were issued at a discount to yield 10
percent. At the beginning of 2016, Zack Corporation (a wholly owned
subsidiary of Brant) purchased $120,000 of these bonds on the open
market for $141,000, a price based on an effective interest rate of
5 percent. The bond liability had a carrying amount on...
Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of...
Several years ago Brant, Inc., sold $960,000 in bonds to the
public. Annual cash interest of 7 percent ($67,200) was to be paid
on this debt. The bonds were issued at a discount to yield 10
percent. At the beginning of 2016, Zack Corporation (a wholly owned
subsidiary of Brant) purchased $160,000 of these bonds on the open
market for $181,000, a price based on an effective interest rate of
5 percent. The bond liability had a carrying amount on...
Several years ago Brant, Inc., sold $1,020,000 in bonds to the public. Annual cash interest of...
Several years ago Brant, Inc., sold $1,020,000 in bonds to the
public. Annual cash interest of 8 percent ($81,600) was to be paid
on this debt. The bonds were issued at a discount to yield 10
percent. At the beginning of 2016, Zack Corporation (a wholly owned
subsidiary of Brant) purchased $170,000 of these bonds on the open
market for $191,000, a price based on an effective interest rate of
6 percent. The bond liability had a carrying amount on...
Several years ago Brant, Inc., sold $1,050,000 in bonds to the public. Annual cash interest of...
Several years ago Brant, Inc., sold $1,050,000 in bonds to the
public. Annual cash interest of 8 percent ($84,000) was to be paid
on this debt. The bonds were issued at a discount to yield 10
percent. At the beginning of 2016, Zack Corporation (a wholly owned
subsidiary of Brant) purchased $210,000 of these bonds on the open
market for $231,000, a price based on an effective interest rate of
6 percent. The bond liability had a carrying amount on...
Several years ago Brant, Inc., sold $1,050,000 in bonds to the public. Annual cash interest of...
Several years ago Brant, Inc., sold $1,050,000 in bonds to the
public. Annual cash interest of 8 percent ($84,000) was to be paid
on this debt. The bonds were issued at a discount to yield 10
percent. At the beginning of 2016, Zack Corporation (a wholly owned
subsidiary of Brant) purchased $210,000 of these bonds on the open
market for $231,000, a price based on an effective interest rate of
6 percent. The bond liability had a carrying amount on...
Several years ago Brant, Inc., sold $900,000 in bonds to the public. Annual cash interest of...
Several years ago Brant, Inc., sold $900,000 in bonds to the
public. Annual cash interest of 8 percent ($72,000) was to be paid
on this debt. The bonds were issued at a discount to yield 12
percent. At the beginning of 2016, Zack Corporation (a wholly owned
subsidiary of Brant) purchased $180,000 of these bonds on the open
market for $201,000, a price based on an effective interest rate of
6 percent. The bond liability had a carrying amount on...
Several years ago Brant, Inc., sold $1,050,000 in bonds to the public. Annual cash interest of...
Several years ago Brant, Inc., sold $1,050,000 in bonds to the
public. Annual cash interest of 8 percent ($84,000) was to be paid
on this debt. The bonds were issued at a discount to yield 10
percent. At the beginning of 2016, Zack Corporation (a wholly owned
subsidiary of Brant) purchased $210,000 of these bonds on the open
market for $231,000, a price based on an effective interest rate of
6 percent. The bond liability had a carrying amount on...
Several years ago Brant, Inc., sold $950,000 in bonds to the public. Annual cash interest of...
Several years ago Brant, Inc., sold $950,000 in bonds to the
public. Annual cash interest of 8 percent ($76,000) was to be paid
on this debt. The bonds were issued at a discount to yield 12
percent. At the beginning of 2016, Zack Corporation (a wholly owned
subsidiary of Brant) purchased $190,000 of these bonds on the open
market for $211,000, a price based on an effective interest rate of
6 percent. The bond liability had a carrying amount on...
Several years ago, Castles in the sand Inc. issued bonds at face value of 1,000 at...
Several years ago, Castles in the sand Inc. issued bonds at face
value of 1,000 at a yield to maturity of 8.6%. Now, with 7 years
left until the maturity of the bonds, the company has run into hard
times and the yield to maturity on the bonds has increased to 15%.
What is the price of the bond now? (Assume semi-annual coupon
payments)
Suppose that investors believe that Castles can make good on the
promise coupon payments but that...
Five years ago REG Inc. sold $200,000,000 worth of bonds with ten years until maturity. The...
Five years ago REG Inc. sold $200,000,000 worth of bonds with
ten years until maturity. The bonds were sold at par, and carry an
annual coupon of 8%. INA Corp. has just sold $180,000,000
worth of bonds to investors, also at par. INA bonds have five years
until maturity and carry a coupon rate of 9% with coupons paid
semi-annually. Neither the REG nor the INA bonds have any complex
features (they are not callable, they are not convertible etc.),...
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