Question
In: Accounting
Light Corporation owns 80 percent of Sound Company's voting shares. On January 1, 20X7, Sound sold...
Light Corporation owns 80 percent of Sound Company's voting shares. On January 1, 20X7, Sound sold bonds with a par value of $300,000 when the market rate was 7 percent. Light purchased two thirds of the bonds; the remainder was sold to nonaffiliates. The bonds mature in ten years and pay an annual interest rate of 6 percent. Interest is paid semiannually on June 30 and Dec 31. Based on the information given above, what amount of interest expense should be reported in the 20X8 consolidated income statement? Assume straight-line amortization method is used.
a. $0
b. $6,711
c.$3,355
d. $13,421
Based on the information given above, what amount of interest expense will be eliminated in the preparation of the 20X8 consolidated financial statements? Assume straight-line amortization method is used.
A. $13,421
B. $13,023
C. $6,711
D. $6,500
Solutions
ekkarill92 answered 10 months agoRelated Solutions
Light Corporation owns 80 percent of Sound Company's voting shares. On January 1, 20X7, Sound sold...
Light Corporation owns 80 percent of Sound Company's voting
shares. On January 1, 20X7, Sound sold bonds with a par value of
$300,000 when the market rate was 7 percent. Light purchased two
thirds of the bonds; the remainder was sold to nonaffiliates. The
bonds mature in ten years and pay an annual interest rate of 6
percent. Interest is paid semiannually on June 30 and Dec 31.
1. Based on the information given above, what
amount of interest expense...
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,...
Wood Corporation owns 70 percent of Carter Company’s voting shares. On January 1, 20X3, Carter sold...
Wood Corporation owns 70 percent of Carter Company’s voting
shares. On January 1, 20X3, Carter sold bonds with a par value of
$645,000 at 98. Wood purchased $430,000 par value of the bonds; the
remainder was sold to nonaffiliates. The bonds mature in five years
and pay an annual interest rate of 8 percent. Interest is paid
semiannually on January 1 and July 1.
a. What amount of interest expense should be reported in the
20X4 consolidated income statement? (Do...
Wood Corporation owns 70 percent of Carter Company’s voting shares. On January 1, 20X3, Carter sold...
Wood Corporation owns 70 percent of Carter Company’s voting
shares. On January 1, 20X3, Carter sold bonds with a par value of
$645,000 at 98. Wood purchased $430,000 par value of the bonds; the
remainder was sold to nonaffiliates. The bonds mature in five years
and pay an annual interest rate of 8 percent. Interest is paid
semiannually on January 1 and July 1.
Required:
a.
What amount of interest expense should be reported in the 20X4
consolidated income statement?...
Wood Corporation owns 70 percent of Carter Company’s voting shares. On January 1, 20X3, Carter sold...
Wood Corporation owns 70 percent of Carter Company’s voting
shares. On January 1, 20X3, Carter sold bonds with a par value of
$615,000 at 98. Wood purchased $410,000 par value of the bonds; the
remainder was sold to nonaffiliates. The bonds mature in five years
and pay an annual interest rate of 8 percent. Interest is paid
semiannually on January 1 and July 1.
Required:
a. What amount of interest expense should be reported in the
20X4 consolidated income statement?...
Wood Corporation owns 70 percent of Carter Company’s voting shares. On January 1, 20X3, Carter sold...
Wood Corporation owns 70 percent of Carter Company’s voting
shares. On January 1, 20X3, Carter sold bonds with a par value of
$652,500 at 98. Wood purchased $435,000 par value of the bonds; the
remainder was sold to nonaffiliates. The bonds mature in five years
and pay an annual interest rate of 8 percent. Interest is paid
semiannually on January 1 and July 1.
a. What amount of interest expense should be reported in the
20X4 consolidated income statement? (Do...
Wood Corporation owns 70 percent of Carter Company’s voting shares. On January 1, 20X3, Carter sold...
Wood Corporation owns 70 percent of Carter Company’s voting
shares. On January 1, 20X3, Carter sold bonds with a par value of
$645,000 at 98. Wood purchased $430,000 par value of the bonds; the
remainder was sold to nonaffiliates. The bonds mature in five years
and pay an annual interest rate of 8 percent. Interest is paid
semiannually on January 1 and July 1.
a.
What amount of interest expense should be reported in the 20X4
consolidated income statement?
b....
On January 1, Patterson Corporation acquired 80 percent of the 100,000 outstanding voting shares of Soriano,...
On January 1, Patterson Corporation acquired 80 percent of the
100,000 outstanding voting shares of Soriano, Inc., in exchange for
$31.25 per share cash. The remaining 20 percent of Soriano’s shares
continued to trade for $30 both before and after Patterson’s
acquisition.
At January 1, Soriano’s book and fair values were as follows
Book Values
Fair Values
Remaining Life
Current assets
$80,000
$80,000
Buildings and equipment
$1,250,000
$1,000,000
5 years
Trademarks
$700,000
$900,000
10 years
Patented technology
...
On January 1, Patterson Corporation acquired 80 percent of the 100,000 outstanding voting shares of Soriano,...
On January 1, Patterson Corporation acquired 80 percent of the
100,000 outstanding voting shares of Soriano, Inc., in exchange for
$31.25 per share cash. The remaining 20 percent of Soriano’s shares
continued to trade for $30 both before and after Patterson’s
acquisition.
At January 1, Soriano’s book and fair values were as follows
Book
Values
Fair
Values
Remaining
Life
Current assets
$80,000
$80,000
Buildings and equipment
$1,250,000
$1,000,000
5 years
Trademarks
$700,000
$900,000
10 years
Patented technology
...
On January 1, Patterson Corporation acquired 80 percent of the 100,000 outstanding voting shares of Soriano,...
On January 1, Patterson Corporation acquired 80 percent of the
100,000 outstanding voting shares of Soriano, Inc., in exchange for
$31.25 per share cash. The remaining 20 percent of Soriano’s shares
continued to trade for $30 both before and after Patterson’s
acquisition.
At January 1, Soriano’s book and fair values were as follows
Book
Values
Fair
Values
Remaining
Life
Current assets
$80,000
$80,000
Buildings and equipment
$1,250,000
$1,000,000
5 years
Trademarks
$700,000
$900,000
10 years
Patented technology
...
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