Suspect Company issued $1,020,000 of 9 percent first mortgage bonds on January 1, 20X1, at 104....

Suspect Company issued $1,020,000 of 9 percent first mortgage bonds on January 1, 20X1, at 104. The bonds mature in 20 years and pay interest semiannually on January 1 and July 1. Prime Corporation purchased $680,000 of Suspect’s bonds from the original purchaser on January 1, 20X5, for $675,000. Prime owns 60 percent of Suspect’s voting common stock.

Required:
a. Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X5.

b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X6.

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ekkarill92 answered 1 year ago

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